SSE relaxes controls on QFII and RQFII investments

20 March 2014   Category: News, Asia, China, Global   By Asia Asset Management

Shanghai Stock Exchange (SSE) has eased restrictions on the investment scope and shareholding ceiling for QFII and RQFII entities in a bid to lure more foreign capital to the Mainland market.

The bourse announced in a statement on March 19 that it has amended the Implementing Rules of the Shanghai Stock Exchange for Securities Trading of Qualified Foreign Institutional Investors decree.

Under the new directive, the latitude for QFII and RQFII institutions to invest will be broadened from conventional asset classes such as equities, fixed income, mutual funds, and options to preferred stocks, asset-backed securities, and policy finance bonds. Furthermore, SSE has raised the shareholding proportion of qualified QFIIs from 20% to 30%. RQFII and QFII institutions have also been given the green light to appoint up to three securities brokerages to open multiple accounts in the bourse, the statement said.

The measures are expected to stimulate foreign investor participation in the A-share market. Currently, QFII funds’ investment in A-share equities is below 100 billion RMB (US$16.2 billion), which translates to less than 1% of A-share market valuation.

According to China Securities Depository and Clearing Corporation Ltd, 629 QFII accounts recorded positive growth over the last 24 consecutive months.