FTSE to launch indices tracking QFII and RQFII investments

09 June 2014   Category: News, Asia, China, Global   By Hui Ching-hoo

Global index provider FTSE Group is set to launch the FTSE Global R/QFII Index Series, a set of benchmarks that will allow market participants to include China A-shares in global indices at a time of their choosing.

The new indices are scheduled to be launched on June 17. They can either be weighted by the aggregate approved QFII/RQFII quota; weighted by free float/foreign ownership restrictions; or have no quota restriction. Investors can also customise the indices based on their own QFII/RQFII allocation.

The move comes as Beijing strives to press ahead with its QFII and RQFII pilot schemes. Up to the end of May, the State Administration of Foreign Exchange (Safe) had dished out a total of US$55.7 billion QFII quotas to 249 foreign financial institutions and granted an aggregate of 238.2 billion RMB ($38.11 billion) RQFII quotas to 66 overseas entities.

Mark Makepeace, CEO of FTSE Group, commented: “China continues to take steps to open its markets to international investors and the debate around the inclusion of A-shares in global benchmarks is of increasing importance to investors. FTSE has an established track record in the region and continues to strive to be at the forefront of passive investment in China.

“The launch of the FTSE Global R/QFII Index Series will provide customers with the flexibility to decide when and how to include China A-shares in their global benchmarks, without making it a requirement. We feel that this is an important step in an evolving process and FTSE will continue to monitor developments in the China market infrastructure, in line with our transparent Country Classification process.”

China A-shares are not currently included in FTSE’s standard global benchmarks. The region has been on its watch list since 2005 and FTSE said its Country Classification Committee had been monitoring market developments with respect to the Quality of Markets Matrix.

A formal review of the status and eligibility of A-shares will be held in September 2014.