RQFII regulations warmly received by market
08 March 2013
News, Asia, China, Hong Kong
By Hui Ching-hoo
Market practitioners have applauded the new set of RQFII regulations announced by the China Securities Regulation Commission (CSRC) on March 6, saying it will help to broaden the pilot scheme’s distribution channel and product variety.
Thomas Kwan, executive director and head of fixed income at Harvest Global Investments, tells Asia Asset Management that the continuing expansion of the RQFII and QFII schemes is an inevitable trend given the increasing convertibility of the RMB. This, together with the growing capacity of the QDII scheme, will facilitate two-way RMB flows across borders, paving the way for full RMB internationalisation.
Mr. Kwan expects the RQFII scheme to further open up to non-Chinese managers in the longer term. However, he plays down the challenge from overseas players, noting that Mainland fund managers still have the advantage with their insightful understanding of the Chinese market.
Mr. Kwan’s remarks coincide with media reports that HSBC and Standard Chartered are expressing interest in participating in the RQFII program.
A spokesperson from Da Cheng International Asset Management told local media that the new directives will differentiate RQFII funds’ product mixes and investment strategies. As such, RQFII participants will be better able to customise their products in accordance with market trends and investment styles.
The new RQFII regulation extends coverage to the affiliates of the country’s commercial banks and commercial insurers. The measure also removes the 80:20 asset allocation restriction on RQFII equity and fixed income products, respectively.
Up to the end of January, State Administration of Foreign Exchange (SAFE) had granted 70 billion RMB (US$11.1 billion) to the affiliates of 24 Mainland securities houses and fund managers.
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