Singapore jumps on the RQFII bandwagon

23 October 2013   Category: News, Asia, China, Singapore   By Asia Asset Management

Singapore has become the latest offshore RMB centre to be designated as a destination for the RQFII pilot scheme after being awarded an aggregate quota of 50 billion RMB (US$7.9 billion). 
This comes a week after China unveiled its plan to grant London-based investors 80 billion worth of RMB RQFII quotas on October 15. 
The Monetary Authority of Singapore (MAS) announced on Tuesday (October 22) that the initiative will allow qualified Singapore-based institutional investors to channel offshore RMB from Singapore into China’s securities markets. RQFII license holders may also issue RMB investment products to the broad pool of investors in Singapore, using the RQFII quota. The RQFII programme will help to diversify the base of investors in China’s capital markets and promote adoption of the RMB for investment.  
Under the directive, Singapore will also be given consideration as one of the investment destinations under the new RMB Qualified Domestic Institutional Investor (RQDII) scheme. This will allow qualified Chinese institutional investors to use RMB to invest in Singapore’s capital markets. The measure will help to broaden the universe of assets available to Chinese investors as well as the investor base for Singapore’s capital markets.
Aside from that, China and Singapore will introduce direct currency trading between the Chinese RMB and Singapore dollar. New measures are being studied to allow cross-border flows of RMB between Singapore and Suzhou Industrial Park (SIP) as well as Tianjin Eco-City (TEC). 
Also, the Singapore Exchange and Shanghai Futures Exchange have signed an MOU to strengthen collaboration in the joint development of commodity derivatives.
MAS Managing Director Ravi Menon said: “2013 has been a most productive year for financial cooperation between Singapore and China. These initiatives would not have been possible without the excellent relations between MAS and our central bank and regulatory counterparts in China. Financial ties between the two countries have deepened considerably and Singapore is well placed to promote greater use of the RMB in international trade and investment in the years to come.”