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China awards new QDII quotas

The fresh quotas are the first for 17-months as the renminbi enjoys a period of strength.

The $3.36bn worth of quotas granted to 18 institutions under the Qualified Domestic Institutional Investor (QDII) scheme were the first since April 2019, according to data from China’s foreign exchange regulator.

Launched in 2006, the QDII programme allows institutions and fund managers to invest offshore within allowable quotas.

The decision to award new quotas seems to have been driven by strong investor demand for exposure to overseas markets, and confidence in the renminbi’s resilience.

Sharp falls in global stock markets and the value of QDII funds in March encouraged domestic investors to go bargain-hunting, which threatened to exhaust the foreign exchange quotas of several asset managers.

E Fund Management, China Asset Management and HuaAn Fund Management were among several firms which suspended subscriptions for some of their QDII products.

Domestic fund managers and securities firms were the main beneficiaries of the fresh quotas. Orient Securities Asset Management, CIB Fund Management, Wanjia Asset Management and Tebon Securities were awarded quotas for the first time (all receiving $200m each except Tebon), while 12 others received additional allocations, mostly amounting to $200m each, according to State Administration of Foreign Exchange (Safe) data.

Of these firms, only Invesco Great Wall Fund Management has a foreign partner.

New recipients of a quota include PSBC Wealth Management, a subsidiary of Postal Savings Bank of China, which was one of six wealth management subsidiaries set up by large state-owned banks in December 2019, after regulators banned them from providing implicit guarantees to their wealth management products.

Institutions with QDII licenses fall into four broad segments, including banks, insurers, trust companies and securities firms/fund managers.

The latter has the highest quota volume, worth $4.99bn shared by 62 firms, up from $4.68bn and 58 firms before the fresh quotas were given, according to Safe data.

The holders of the largest QDII quotas are China Asset Management ($3.65bn), Harvest Fund Management ($3.6bn), Citibank China ($3.4bn), HSBC China ($3.4bn), and E Fund Management ($3.05bn).

Currency perspective

Safe’s decision to allow more outbound flows comes as the renminbi has strengthened against the dollar over the past weeks.

The currency has appreciated 4.7% against the US dollar since its low of RMB 7.16 on 27 May, due to a combination of the relative recovery of the Chinese economy compared with the rest of the world, inflows and headwinds for the greenback.

It is now trading at around RMB 6.82, according to Morningstar data,

New QDII quota allocations were suspended for three years from 2015 when China’s stock market crash triggered massive capital outflows. They were resumed in April 2018 and 24 firms received fresh QDII quotas of $8.33bn.

Before the latest move by Safe, the most recent new quotas were granted in April 2019.

QDII first-time approvals

Quota size (US$)

Firm type

PSBC Wealth Management



Orient Securities Asset Management


fund manager

CIB Fund Management


fund manager

Wanjia Asset Management


fund manager

Tebon Securities


securities firm

Source: State Administration of Foreign Exchange, 23 September 2020

QDII additional quotas

Extra quota size ($) Total quota size ($) Firm type
Harvest Fund Management 200m 3.6bn fund manager
Yinhua Fund Management 300m 900m fund manager
CMS Asset Management 200m 600m fund manager
E Fund Management 200m 3.05bn fund manager
Bosera Asset Management 200m 1.8bn fund manager
GF Fund Management 200m 1.2bn fund manager
Fullgoal Fund Management 200m 1.08bn fund manager
Shanghai Guotai Juan Securities Asset Management 200m 650m fund manager
Invesco Great Wall Fund Management 200m 650m fund manager
Citic Securities 200m 1.28bn securities firm
Bank of Beijing Scotiabank Asset Management 140m 340m fund manager
First Seafront Fund Management 190m 390m fund manager
China Industrial International Trust 80m 280m trust company
Source: State Administration of Foreign Exchange, 23 September 2020

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