Regulator awards fresh QFII, RQFII quotas
China’s foreign exchange regulator has handed $1.4 billion in fresh quotas to eight QFII licence holders, and Rmb19 billion ($3 billion) to six RQFII players.
The largest qualified foreign institutional investor (QFII) award went to Canada Pension Plan Investment Board (CPPIB), which received $500 million.
That adds to the $100 million it was granted last March and means it has received $600 million in a year, since being handed a QFII licence in December 2011.
AsianInvestor understands the firm plans to deploy the quota solely in the A-share market. But Mark Machin, who joined CPPIB as president last March, declined to comment further.
Meanwhile, Hong Kong’s Value Partners was handed a $100 million QFII quota. The firm last year acquired Belgian firm KBC Asset Management’s 49% equity interest in Shanghai-based KBC Goldstate for an estimated Rmb40.5 billion, as reported.
Timothy Tse, chief executive of Value Partners, tells AsianInvestor it plans to fully utilise its QFII quota by setting up a new A-share fund focused on global institutional investors, as well as allocating quota to its existing A-share funds.
At present Value Partners is exposed to China’s A-share market via participatory notes, and Tse says that the new quota will be used to increase its A-share exposure, rather than replace the P-notes.
Of the six other QFIIs to be handed new quotas, Morgan Stanley and Deutsche Bank received $200 million apiece, meaning they now have $600 million each; BOC Group Life Assurance Company was granted $200 million; KB Asset Management $100 million; and The Church Pension Fund and Duke University $50 million each.
As at the end of December, Safe had awarded a total of $37.4 billion in QFII quotas to 169 licence holders.
Separately, Safe also granted six new quotas within the RQFII scheme, which was introduced in December 2011 to allow the Hong Kong subsidiaries of mainland fund managers to invest back into the onshore securities market.
Initial guidelines were that no less than 80% could be invested in fixed income and no more than 20% in equity. That was subsequently expanded to allow qualified providers to issue A-share ETF product.
New RQFII licence holders ICBC Credit Suisse, China International Fund Management and GF Fund Management were each awarded Rmb800 million.
Cindy Qu, an analyst from Shanghai-based consultancy Z-Ben Advisors, says she expects them to launch RQFII bond funds to begin with, noting it is more risky to launch an RQFII ETF than a bond fund.
China Asset Management and E Fund were awarded an additional $5.8 billion in RQFII quotas for their fixed income funds and ETFs, while CSOP was handed Rmb5 billion for its ETF.
As at the end of December, Safe had granted Rmb67 billion to 24 RQFII holders.