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More foreign firms file QFII applications in China

Foreign asset management firms have been applying for licences to invest onshore in China.

Since the beginning of this year, six foreign firms have applied for the qualified foreign institutional investor (QFII) license, according to records from the China Securities Regulatory Commission (CSRC).

Both the 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.

There are in total 14 firms that have filed the application for QFII license and 12 for the RQFII qualification since Chinese regulators abolished the quota restrictions in September last year to further facilitate foreign investment.

The six new applicants include Sumitomo Mitsui Trust Asset Management, US-based Krane Funds Advisors, CM Capital Advisors, AHL, Haitong International Securities and Cube (立方科研资产管理), CSRC records show.

Among them, only Sumitomo Mitsui Trust Asset Management and Haitong International Securities have received the notification that the CSRC has started to deal with their applications.

The other four applications are still in awaiting the regulatory process, CSRC records show.

Sumitomo Mitsui Trust Asset Management follows other Japanese asset managers that have previously joined the QFII scheme, including SBI Asset Management, Asset Management One, Mitsubishi UFJ Kokusai Asset Management, Nikko Asset Management and Nomura Asset Management.

Krane Funds Advisors is known for its China-focused ETFs and China strategies. CICC acquired a majority stake in Krane in 2017 and it has cooperated with E Fund Management and Bosera Asset Management for ETF products.

There were 15 applications from foreign firms for the QFII scheme in 2019, compared with three in 2018 and ten in 2017, CSRC records show.


On the RQFII front, there are also six foreign firms which have filed an application for a licence, according to CSRC records.

The six applications are from First State Investments (Hong Kong), WT Asset Management, Baillie Gifford Overseas, Central Wealth Asset Management, China Construction Bank Securities and Join Asset International (Join Asset 国际资产运用株式会社), the regulator’s records show.

Foreign firm applications for the RQFII license reached 20 in 2019, and the figure was the same in 2018, compared with 14 in 2017, CSRC records show.

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 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, the regulator previously noted.

However, last year China issued a consultation proposing to combine the QFII and RQFII schemes because the stock and bond connect programmes and the China Interbank Bond Market share the same investment scope and have made it easier for foreign investors to access the Chinese onshore market.

Part of the Mark Allen Group.