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More foreign firms apply for China’s inbound scheme

Twelve firms have applied for the QFII and RQFII programmes in the fourth quarter this year.

Both the qualified foreign institutional investor (QFII) and its renminbi equivalent (RQFII) programmes involve money going in to China. They allow foreign institutional investors, including fund managers, to invest in China’s onshore equities and bond markets, within specific quotas.

However, Chinese regulators abolished the quota restrictions in September in a move to further facilitate foreign investment.

Since the abolishment of the quota system, seven foreign firms have applied for QFII licences, according to records from the China Securities Regulatory Commission (CSRC). The figure is equivalent to the total number of QFII applications in the first three quarters.

New QFII applicants include Tokyo-based SBI Asset Management and British quant firm Winton Capital, CSRC records show.

SBI Asset Management was established in 1986 with paid-in capital of ¥400m ($3.68m), the firm’s website shows. Other Japanese asset managers that have previously joined the QFII programme include Asset Management One, Mitsubishi UFJ Kokusai Asset Management, Nikko Asset Management and Nomura Asset Management.

Meanwhile, Winton Capital already has a business in the mainland, where it operates as a private fund manager with seven onshore products.

Of the seven QFII applicants, only Nashville, Tennessee-based Vanderbilt University has been granted the license and the rest six are still in the pending process, the regulator’s record shows.

On the RQFII front, five firms applied for the licence in the fourth quarter, including Investec North America, Empyrean Management (Hong Kong) and Himalaya Capital. All the five firms are still waiting for regulatory approval, CSRC records show.

Since the beginning of this year, the total number of asset managers applying for the two licenses has reached 33, which compares to 23 in 2018 and 24 in 2017.

Since the implementation of the QFII system in 2002, 292 firms globally, including asset managers and institutions, have been investing in China through the channel, according to data from China’s State Administration of Foreign Exchange (Safe).

As for the RQFII system, which was introduced in 2011,  222 firms globally have invested in China’s financial market through the scheme.

 

Part of the Bonhill Group.