China grants $5bn in inbound quotas

Data

Also in April, China issued additional outbound quotas to five domestic firms after nearly a year of non-issuance.

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

Nine firms received new or additional QFII quotas in April, with four of them being Japanese firms, according to records from SAFE. In total, the regulator granted $4.2bn in quotas during the month.

 

QFII granted in April (in US dollars)

FirmCountryAdditional / new quota receivedTotal quota
Macquarie BankAustralia500m1.3bn
Societe GeneraleFrance1bn2.7bn
Deutsche BankGermany400m1bn
Asset Management OneJapan200m500m
Mitsubishi UFJ Kokusai Asset ManagementJapan300m300m
Nikko Asset ManagementJapan200m650m
Nomura Asset ManagementJapan200m550m
Nomura SingaporeSingaporeNew quota500m
Merrill Lynch InternationalUK1bn1.94bn
Source: SAFE

On the RQFII front, five firms received new or additional allotments during the month, including Amundi in Hong Kong, which received a quota of RMB 4bn ($590m). It already has a quota under the QFII scheme amounting to $100m, which it received in 2012.

Amundi in other jurisdictions already has RQFII allotments. They include Amundi Singapore (RMB 2.8bn), Amundi Asset Management in France (RMB 2.8bn) and Korea-based NH-Amundi Asset Management (RMB 1.5bn), which is the joint venture firm between NH Financial Group (holding a 70% stake) and Amundi (30%), SAFE records show.

 

RQFII granted in April (in RMB)

FirmCountryAdditionalTotal quota
Cephei Capital Management (Hong Kong)Hong Kong1.5bn2.8bn
Zeta Capital (H.K.)Hong KongNew quota600m
PICC Asset Management (Hong Kong)Hong KongNew quota2bn
Amundi Hong KongHong KongNew quota4bn
International Monetary FundNew quota1.6bn
Source: SAFE

In total, the regulator granted RMB 9.7bn in RQFII quotas in April.

Earlier this year, the China Securities and Regulatory Commission proposed combining the two quota schemes, which could help foreign managers with private fund management licences seed their own funds.

Part of the proposal is to expand the investment scope of the inbound schemes, which will include private investment funds, financial futures, commodity futures and options.

Since the quota programmes began, SAFE has awarded a total of RMB 670.67bn in RQFII quotas to 214 licence holders, and $105.8 in QFII quotas to 290 licence holders, according to SAFE.

QDII continues

Separately, the regulator granted five domestic firms in China each received additional QDII quotas of $150m.

The qualified domestic institutional investor scheme allows mainland-based firms to invest in offshore markets.

QDII recipients in April (in US dollars)

FirmTotal quota
Huaan Fund Management1.35bn
Southern Fund Management2.75bn
China Asset Management3.65bn
E Fund Management2.85bn
Guotai Fund Management550m
Source: SAFE

The last time SAFE granted QDII quotas was in June, according to the regulator’s records.

China revived the QDII programme in April after a long halt. In 2015, authorities stopped issuing QDII quota due to concerns over capital outflows and the effect on the country’s currency.

In total, the regulator has issued $103.98bn in QDII quotas to 152 licence holders since the programme began.

QDII funds, however, had net outflows of around $1.59bn last year, according to data from Morningstar Direct. The products continue to bleed this year, with around RMB 1.12bn in outflows during the first quarter.

However, not all QDII funds saw net outflows, with Greater China, Asia-Pacific (ex-Japan), US and global equity funds having positive flows this year, according to Morningstar.

QDII funds inflows/(outflows) (in RMB m)

NameYTD
Greater China Equity363
Asia-Pacific ex-Japan Equity195
US Equity39
Global Bond18
Emerging Markets Allocation(7)
Emerging Markets Equity(9)
Other(33)
Global Equity(83)
Asia Allocation(84)
Commodities(158)
Sector Equity(221)
Greater China Allocation(490)
Global Allocation(655)
Total(1,125)
Source: Morningstar Direct

Tags: | | |

Leave a Reply