CIMB-Principal tops up RQFII quota

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Kuala Lumpur-based CIMB-Principal Asset Management has received additional quota enabling the firm to invest in China’s onshore markets, according to latest records from the country’s State Administration for Foreign Exchange (SAFE).

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.

CIMB-Principal is a joint venture firm between Malaysia’s CIMB Group and US-based Principal Financial Group, which holds 60%.

The firm’s RQFII quota has been increased to RMB 1.6bn ($250m) in May from RMB 600m, according to SAFE records. The firm first received its quota in May last year and has since been the only Malaysian firm to be awarded an RQFII quota. In November 2015, China extended RQFII quota to include Malaysian firms.

The firm’s additional quota comes just after it launched, in March, Malaysia’s first fund that directly invests in China’s onshore equities market.

At the time of the launch, Munirah Khairuddin, CIMB-Principal’s CEO, said he was optimistic about investor demand. He expects assets to reach $100m within the first year, a target which is larger than the firm’s previous RQFII quota.

Firms usually increase their quotas when they are almost used up. FSA sought more information from CIMB-Principal, but the firm was not able to comment about the additional quota and the current AUM of its China-focused fund.

Even before the fund launch, Malaysian investors had the opportunity to invest in China’s A-share market through feeder funds. They include Amfund Management’s AMChina A-Shares Fund, which feeds into the Allianz China A-Shares Fund and Affin Hwang Asset Management’s China Growth Fund, which feeds into Blackrock’s China Fund that invests in both offshore and onshore Chinese equities, according to the fund factsheets.

Quota update

No new or additional QFII quotas were given in May, SAFE records show.

Since the quota programmes began, SAFE has awarded a total of RMB 615.52bn in RQFII quotas to 196 holders and $99.46bn of QFII quotas to 287 licence holders, according to the agency’s data.

RQFII and QFII bring capital into China. By comparison, the qualified domestic institutional investor (QDII) scheme, which was launched in 2006, is a channel for onshore investors to invest offshore.

In May, the regulator granted eight domestic firms first-time QDII quotas, SAFE records show. In total, SAFE has awarded $101.5bn in QDII quotas to 152 entities.

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.

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