Blackrock receives $2.27bn in RQFII quotas

China’s qualified foreign institutional investor scheme (QFII) and its renminbi equivalent (RQFII) allow foreign institutional investors to invest in onshore Chinese assets, within allocated quotas.

Three firms registered in Hong Kong received additional quotas: Blackrock, Mirae Asset Global Investments and Orient Finance Holding (Hong Kong). This is the second batch of Hong Kong-based firms to take advantage of Hong Kong’s extended RQFII quota allocation, with Agricultural Bank of China’s ABCI Asset Management being the first to receive additional quotas last month.

RQFII quotas given (August, RMB)

Source: State Administration for Foreign Exchange

With Blackrock’s additional quota, the firm now has the fourth largest RQFII quota out of the 80 quota holders in Hong Kong, increasing to RMB 17bn from RMB 2bn. It is now larger than its US entity’s quota of RMB 11bn, but is still smaller than the quota it has in Singapore (RMB 20bn). It also has an RQFII quota for its UK entity (RMB 2.1bn).

In total, the firm has an RQFII quota of RMB 50.1bn. 

Blackrock has several China-focused funds. For example, in Hong Kong, its three ETFs that invest in China A-shares collectively manage nearly $4bn in assets. Its China ETF listed the US manages around $10m, while an active China A-Shares fund that is for sale in Hong Kong has around $57.90m in assets. 

Blackrock funds

Source: Blackrock, *listed in Hong Kong ** listed in the US ***for sale in Hong Kong

First State Investment Management (UK) and Korea’s Shinhan Bank received RQFII quotas for the first time, according to the regulator’s records. First State received a quota of RMB 8.2bn ($1.24bn), while Sinhan Bank’s quota is RMB 1bn.

This is not the first time that First State is investing onshore. It currently has around $1.4bn invested in China A-shares, according to a spokeswoman at First State Stewart Asia, the independent Asia-focused investment management team of the firm. 

Besides RQFII, the team has been using other methods to invest in the China A-share market, including QFII and Stock Connect, she noted. First State already has $630m of QFII quotas, which it first obtained in 2015, according to SAFE records.

The firm manages a range of China equity funds, including an institutional portfolio called the First State China A-Share Fund and the recently-launched First State All China Fund, which is a UK-domiciled fund that currently invests around 40% of its assets in China A-Shares, she added.

QFII quotas

Separately, Shenwan Hongyuan Singapore and US’ Acadian Asset Management were granted RQFII licences in July, according to records from the China Securities Regulatory Commission (CSRC). 

On the QFII front, Guotai Junan Assets (Asia) and Caitong International Asset Management received QFII quotas for the first time, amounting to $700m and $20m, respectively.

Since the quota programmes began, SAFE has awarded a total of RMB 584.86bn in RQFII quotas to 188 holders and $94bn in QFII quotas to 286 quota holders, according to SAFE data.

In total, there are 222 RQFII licence holders and 311 QFII licence holders, according to CSRC data.

RQFII and QFII bring capital into China. In comparison, the qualified domestic institutional investor (QDII) scheme provides quota for onshore investors to invest offshore. However, SAFE stopped issuing new QDII quota in March 2015 due to concern over capital outflows and the subsequent effect on the RMB currency.