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China may Expand RQFII Scheme as Investors Seeking More Access to Yuan Bond Funds

11-08 15:30 Caijing
The CSRC is considering raising quotas of the so-called Renminbi Qualified Foreign Institutional Investor (RQFII) pilot scheme, and reducing restrictions on investments

China's securities regulator is considering expanding and relaxing a pilot scheme which allows Chinese asset managers to invest in China's bond market using renminbi raised in Hong Kong, the official Securities Daily reported, echoing a wave of enthusiasm for renminbi-denominated bond funds.

The China Securities Regulatory Commission is considering raising quotas of the so-called Renminbi Qualified Foreign Institutional Investor (RQFII) pilot scheme, and reducing restrictions on investments, the newspaper said, quoting an unnamed source with the CSRC.

"The Hong Kong's side hopes to expand the program and raise RQFII quotas," the source said, adding that there are calls for an increase of 100-200 billion yuan in quotas.

There has been growing interest among Hong Kong institutions since the high-profile launch of RQFII in February, the report said. Investors snapped up E Fund CSI 100 A-Share ETF RQFII and CSOP FTSE A50 ETF (Stock Code: 82822.hk), two RQFII A-Share Exchanged Traded Fund products the first day they were sold in August.

The A-share market will see a flood of new money as the program expands, analysts say. Besides, opening up another investment channel through which renmimbi held offshore could flow back into the mainland also marks a further step towards the currency's full convertibility.

 

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