Kuwait state fund joins $1.5bn QFII club

Kuwait Investment Authority obtained an additional $500 million QFII quota in January. Ten other institutions were beneficiaries, including Korea's central bank.
Kuwait state fund joins $1.5bn QFII club

Kuwait Investment Authority has become the fourth entity to hold more than $1 billion in quota under China’s qualified foreign institutional investor scheme.

The sovereign wealth fund obtained an additional $500 million QFII quota in January, bringing its total to $1.5 billion, alongside three other institutions. KIA has $410 billion in assets, according to the Sovereign Wealth Institute, and is the world's oldest SWF, set up in 1953.

The Hong Kong Monetary Authority (HKMA) was the first to pass the $1 billion mark in August. Norway’s central bank, Norges Bank, followed one month later, with Singapore’s Temasek Fullerton Alpha Investments joining the club in October.

China’s State Administration of Foreign Exchange (Safe) removed the $1 billion cap on QFII quotas for central banks and sovereign funds in December 2012, as it views them as particularly long-term investors and therefore ‘stickier’ money.

Others expected to exceed $1 billion in quota include Abu Dhabi Investment Authority, Bank Negara Malaysia and Singapore’s GIC.

Safe has been hastily handing out QFII quota ahead of the lunar new year on January 31, awarding $1.8 billion in total to 11 entities this month. Notable recipients include Bank of Korea, which received $300 million, bringing its total to $600 million.

While some asset owners continue to march into the mainland, others are withdrawing. Invesco Asset Management has handed back $83.1 million in quota in January, marking the second time the fund house has done so in less than a year. In May, Invesco handed back $61 million, reducing its total amount of quota to $206 million. Invesco declined to comment by press time.

Meanwhile, Julius Bear – the first private bank to obtain a QFII licence, in May 2011 – received $50 million, while Hillhouse Capital Management got $300 million.

Two Temasek subsidiaries – SeaTown Holdings and ST Asset Management – received $100 million and $50 million respectively.

Other recipients of $100 million were China Life Franklin Asset Management, Franklin Templeton SinoAM Securities Investment Management, Investec Asset Management, Pimco and UBS Hana Asset Management.

Safe has awarded $51.4 billion in QFII quota to 235 licence holders since the programme launched in 2003.

Meanwhile, Safe granted Rmb167.8 billion ($27.8 billion) to 57 renminbi qualified foreign institutional investor quota holders in January.

CSOP obtained Rmb4 billion of additional RQFII quota, which will be allocated to the firm’s Hong Kong- and London-listed FTSE A50 exchange-traded funds. The firm plans to list the first RQFII ETF tracking fixed income after the end of January.

Chong Hing Bank, Guangdong Securities and JF Asset Management each received Rmb1 billion in RQFII quota this month, while Shanghai International Asset Management’s Hong Kong branch and Guotai Junan each secured Rmb800 million. China Everbright Asset Management received Rmb700 million.

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