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China’s quota programmes take a break

China did not give additional allocations for its inbound and outbound quota programmes last month, according to records from the State Administration of Foreign Exchange (SAFE).

China’s qualified foreign institutional investor scheme (QFII) and its reniminbi equivalent (RQFII) allow foreign institutional investors to invest in onshore Chinese assets, within allocated quotas. By comparison, the qualified domestic institutional investor (QDII) scheme is a channel for onshore investors to invest offshore.

In July, there were no new quota holders nor additional quotas given under the QFII and RQFII schemes, according to the SAFE records.

RQFII and QFII quotas remain unchanged from June, with SAFE awarding a total of RMB 622.07bn in RQFII quotas to 197 licence holders and $ of QFII quotas to 287 licence holders.

This year, foreign managers have been granted additional quotas, including Blackrock, UBS Asset Management and CIMB-Principal Asset Management, as their previous quotas have been nearly used up. Some US firms, such as Wisdom Tree, Acadian Asset Management and Bridgewater Associates, have become new licence holders.

There were also no new quota holders under the QDII scheme. One firm lost its quota. Shanghai’s Orient Securities Asset Management’s $100m quota was removed in July.

The total QDII quota granted is therefore brought down to $103.2bn given to 152 licence holders.

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.

Part of the Mark Allen Group.