China’s qualified foreign institutional investor scheme (QFII) and its renminbi equivalent (RQFII) allow foreign institutional investors to invest in onshore assets using US dollars and offshore renminbi, respectively, within allocated quotas.
VanEck Investments received RMB 1.1bn ($161.2m) in RQFII quotas for the first time in May, according to records from China’s State Administration of Foreign Exchange (SAFE). The firm was granted its RQFII licence from the China Securities Regulatory Commission (CSRC) in February, as reported.
The records show that VanEck’s Australian entity received the quota. It is the second firm in Australia that was granted an RQFII quota. The first firm was Vanguard, which has RMB 30bn in quotas. The RQFII programme was first extended to the country in 2014 and was given an aggregate quota ceiling of RMB 50bn.
QFII quotas
In the QFII space, BOB Scotia International Asset Management, part of a joint venture between the Bank of Beijing and Canada’s Scotia Bank, received a $200m quota.
Another firm, Essence Asset Management (Hong Kong), was granted a $100m QFII quota.
Additional quotas were given to Goldman Sachs International ($300m for a total of $600m) and Taikang Asset Management (Hong Kong) ($1.36bn for a total of $1.83bn), according to SAFE records.
Goldman Sachs has two other entities that have QFII quotas: with Goldman Sachs & Co ($900m) Goldman Sachs Asset Management ($302m).
Taikang AM, a subsidiary of Beijing-based Taikang Insurance, is one of the few firms that was granted a huge QFII quota. Only 13 firms have quotas above $1.5bn and they are typically banks, such as UBS and Societe Generale, or institutional investors such as GIC, Temasek, the Hong Kong Monetary Authority and Abu Dhabi Investment Authority, the records show.
Since the quota programmes began, SAFE has awarded a total of RMB 543.1bn in RQFII quotas to 184 licence holders and $92.72bn in QFII quotas to 283 licence holders, according to SAFE.
RQFII and QFII bring capital into China. By comparison, the qualified domestic institutional investor (QDII) scheme provides quota for onshore investors to invest onshore.
However, SAFE stopped issuing new QDII quota in March 2015 due to concern over capital outflows and the subsequent effect on the RMB currency.
