Malaysia’s central bank gets third highest QFII quota

Bank Negara Malaysia becomes the eighth manager to hit $1 billion in QFII quota after receiving $600 million in Safe's July batch. Ontario Teachers is among the other winners.
Malaysia’s central bank gets third highest QFII quota

Malaysia’s central bank has received the third highest QFII quota at $600 million in the latest batch of awards to overseas institutions from China’s State Administration of Foreign Exchange (Safe).

It brings Bank Negara Malaysia’s total qualified foreign institutional investor (QFII) quota to $1 billion, putting the Malaysian central bank in an elite group: the Qatar Investment Authority, Government of Singapore Investment Corporation, Hong Kong Monetary Authority, Abu Dhabi Investment Authority, Kuwait Investment Authority, Temasek Fullerton  Alpha and Norway’s Norges Bank are the sole investors to hit the $1 billion QFII quota mark.

In terms of single quota handouts, only the Qatar Investment Authority, Kuwait Investment Authority, HKMA and Temasek Fullerton Alpha have received higher quotas than Bank Negara Malaysia – last November Qatar received $1 billion, while HKMA, Kuwait Investment Authority and Temasek have each received $700 million in the past 12 months.

To encourage more direct investment into its capital markets and speed up the internationalisation of its currency, Safe has been handing out higher quotas to renminbi qualified foreign institutional investor (RQFII) and QFII holders – in July alone, Safe awarded $1.5 billion to eight QFII holders.

No investors have topped the $1 billion mark yet, despite Safe removing a $1 billion cap last December, which indicates that the regulator will continue to take a prudent approach when it comes to opening its capital markets.

In the July handouts, Canada’s Ontario Teachers’ Pension Plan received $200 million, bringing its total quota to $300 million. Ontario Teachers’, which has so far invested $10 billion in Asia, has plans to boost allocations in the region after receiving type 1, 4 and 9 licences in Hong Kong.

Further, BNP Paribas and Cathay Securities Investment Trust each received $150 million in quota, while Princeton University, China Everbright Assets Management, Bosera Asset Management and China International Capital Corporation were awarded $100 million each.

Cathay Securities Investment Trust plans to use this additional QFII quota to launch three multi-currency umbrella funds denominated in RMB and NT dollars, while Hang Seng Investment Management, which became the first non-Chinese financial institution to win Rmb1 billion ($163 million) in QFII quota in July, will launch an A-share ETF.

Separately, Safe also handed out RQFII quota to 14 institutions: China Asset Management (Rmb3 billion);  E Fund (Rmb2.8 billion); Guotai Junan International (Rmb1.6 billion); HFT, Everbright Securities and Haitong International (Rmb1 billion each); GF International Investment Management, ICBC (Asia) Investment Management, China Merchant Securities, China Investment Securities, Taikang Asset Management and ABC International (Rmb800 million each); CSOP (Rmb500 million); and Da Cheng International (Rmb300 million).

As of July 31, $45 billion has been awarded to 210 QFII holders, while 34 RQFII holders have received Rmb121.9 billion.

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