Qualified Foreign Institutional Investor
The Qualified Foreign Institutional Investor program, one of the first efforts to internationalize the RMB, represents China's effort to allow, on a selective basis, global institutional investors to invest in its RMB denominated capital market.[1] Once licensed, foreign investors are permitted to buy RMB-denominated “A shares" in China's mainland Shanghai and Shenzhen stock exchanges.[2] Thus foreign investors benefit from an opportunity to invest onshore, which is otherwise often insulated from the rest of the world, and subject to capital controls governing the movement of assets in-and-out of the country.[3]
Development
The program has been in operation for over a decade, and quotas allocating RMB under licenses have expanded steadily. By the end of April 2011, 103 licensed QFII investors had been granted a combined quota of $20.7 billion to invest in China's capital markets under the QFII program, UBS AG currently holds the greatest single share of quota. Foreign access to China's yuan-denominated "A" stocks are still limited, with quotas placed under the QFII program amounting to US$30 billion.[4]
In April, 2012, the Qualified Foreign investment quota was increased from US$30 billion to US$80 billion. Before the increase, the overall value of approved QFII and RQFII (offshore Renminbi QFII[5]) funds was only 0.8% of total market capitalization and only US$25 billion of the US$30 billion quota was used. While aspects of the increased quota seem likely to take business from Hong Kong, a pilot program in Wenzhou for domestic investors to invest abroad was considered a possible offset for the financial center.[6] The QFII expansion was also followed quickly by the "approval of new ETF products that will be denominated in offshore yuan (CNH) but will trade on the Hong Kong Stock Exchange".[7]
China granted $910 million worth of investment quotas to 11 foreign institutional investors in March 2013. The quotas, under the Qualified Foreign Institutional Investor (QFII) scheme, were awarded to overseas institutions including Generali Fund Management S.A, IDG Capital Management (HK) Ltd and Cutwater Investor Services Corp. By the end of March 2013, China had awarded a combined $41.745 billion of QFII quotas to 197 foreign institutions.[8]
By the end of February 2014, the total quotas issued under the QFII programme to $52.3 billion as of Feb. 28 from $51.4 billion at the end of December, and to 180.4 billion yuan ($29.44 billion) from 167.8 billion yuan under the RQFII programme, according to data by the Chinese agency, SAFE[9]
Background
Regulations of the QFII program were based on "Temporary Regulation on Domestic Securities Investment by Qualified Foreign Institutional Investor" (合格境外机构投资者境内证券投资管理暂行办法), which was publicized on 5th Nov 2002 and ceased to be in effect on 1st Sep 2006, and "Regulation on Domestic Securities Investment by Qualified Foreign Institutional Investor"(合格境外机构投资者境内证券投资管理办法), which is publicized on 24th Aug 2006, and came into effect on 1st Sep 2006.[10]
Pursuant to "Regulation on Domestic Securities Investment by Qualified Foreign Institutional Investor", to qualify as a QFII, the candidate must:
- have stable finance, good credibility, meet the minimum asset scale set by China Securities Regulatory Commission (CSRC);
- the number of staffs meet the requirement set by the authority in its own country or area;
- has healthy governing structure and complete internal control system, received no significant punishment in the last 3 years;
- candidate's home country has complete legal and supervision system, and its home country or home area has signed Memorandum of Understanding(MOU) with CSRC, and maintains effective supervision cooperation;
- other requirements set by CSRC based on prudence.
QFII Qualification Statistics
| No. | Name of QFII | Qualification approved date | Country of domicile | Custodian bank | Approved Quota |
|---|---|---|---|---|---|
| 1 | UBS AG | May 23, 2003 | |||
| 2 | Nomura Securities Co., Ltd. | May 23, 2003 | |||
| 3 | Morgan Stanley & Co. International Limited | June 5, 2003 | |||
| 4 | Citigroup Global Markets Limited | June 5, 2003 | |||
| 5 | Goldman, Sachs & Co. | July 4, 2003 | |||
| 6 | Deutsche Bank AG or Deutsche Bank Aktiengesellschaft | July 30, 2003 | |||
| 7 | The Hongkong and Shanghai Banking Corporation Limited | August 4, 2003 | |||
| 8 | ING Bank N.V. | September 10, 2003 | |||
| 9 | JPMorgan Chase Bank | September 30, 2003 | |||
| 10 | Credit Suisse (HongKong) Limited | October 24, 2003 | |||
| 11 | Standard Chartered Bank (HongKong) Limited | December 11, 2003 | |||
| 12 | Nikko Asset Management Co., Ltd. | December 11, 2003 | |||
| 13 | Merrill Lynch International | April 30, 2004 | |||
| 14 | Hang Seng Bank | May 10, 2004 | |||
| 15 | Daiwa Securities SMBC Co., Ltd. | May 10, 2004 | |||
| 16 | Lehman Brothers International (Europe) | July 6, 2004 | |||
| 17 | Bill & Melinda Gates Foundation | July 19, 2004 | |||
| 18 | INVESCO Asset Management Limited | August 4, 2004 | |||
| 19 | ABN AMRO Bank N.V. | September 2, 2004 | |||
| 20 | Société Générale | September 2, 2004 | |||
| 21 | Templeton Asset Management Ltd. | September 14, 2004 | |||
| 22 | Barclays Bank PLC | September 15, 2004 | |||
| 23 | Dresdner Bank Aktiengesellschaft | September 27, 2004 | |||
| 24 | Fortis Bank SA/NV | September 29, 2004 | |||
| 25 | BNP Paribas | September 29, 2004 | |||
| 26 | Power Corporation of Canada | October 15, 2004 | |||
| 27 | Calyon S.A. | October 15, 2004 | |||
| 28 | Goldman Sachs Asset Management International | May 9, 2005 | |||
| 29 | Martin Currie Investment Management Ltd. | October 25, 2005 | |||
| 30 | Government of Singapore Investment Corporation Pte. Ltd. | October 25, 2005 | |||
| 31 | AIG Global Investment Corp. | November 14, 2005 | |||
| 32 | Temasek Fullerton Alpha Investments Pte. Ltd. | November 15, 2005 | |||
| 33 | JF Asset Management Limited | December 28, 2005 | |||
| 34 | The Dai-ichi Mutual Life Insurance Company | December 28, 2005 | |||
| 35 | DBS Bank Ltd. | February 13, 2006 | |||
| 36 | AMP Capital Investors Ltd. | April 10, 2006 | |||
| 37 | Scotiabank or The Bank of Nova Scotia | April 10, 2006 | |||
| 38 | KBC Financial Products UK Limited | April 10, 2006 | |||
| 39 | La Compagnie Financière Edmond de Rothschild Banque | April 10, 2006 | |||
| 40 | Yale University | April 14, 2006 | |||
| 41 | Morgan Stanley Investment Management Inc. | July 7, 2006 | |||
| 42 | Prudential Asset Management (Hongkong) Limited | July 7, 2006 | |||
| 43 | Stanford University | August 5, 2006 | |||
| 44 | GE Asset Management Incorporated | August 5, 2006 | |||
| 45 | United Overseas Bank Limited | August 5, 2006 | |||
| 46 | Schroder Investment Management Limited | August 29, 2006 | |||
| 47 | HSBC Investments (Hongkong) Limited | September 5, 2006 | |||
| 48 | Shinko Securities Co., Ltd. | September 5, 2006 | |||
| 49 | UBS Global Asset Management (Singapore) Ltd. | September 25, 2006 | |||
| 50 | Sumitomo Mitsui Asset Management Company, Limited | September 25, 2006 | |||
| 51 | Norges Bank | October 24, 2006 | |||
| 52 | Pictet Asset Management Limited | October 25, 2006 | |||
| 53 | The Trustees of Columbia University in the City of New York | March 12, 2008 | |||
| 54 | Prudential Asset Management Co., Ltd. | April 7, 2008 | |||
| 55 | Robeco Institutional Asset Management B.V. | May 5, 2008 | |||
| 56 | State Street Global Advisors Asia Limited | May 16, 2008 | |||
| 57 | Platinum Investment Company Limited | June 2, 2008 | |||
| 58 | KBC Asset Management N.V. | June 2, 2008 | |||
| 59 | Mirae Asset Investment Management Co., Ltd. | July 25, 2008 | |||
| 60 | ACE INA International Holdings, Ltd. | 2008.8.5 | |||
| 61 | Caisse de dépôt et placement du Québec | 2008.8.22 | |||
| 62 | President and Fellows of Harvard College | 2008.8.22 | |||
| 63 | Samsung Investment Trust Management Co., Ltd. | 2008.8.25 | |||
| 64 | AllianceBernstein Limited | 2008.8.28 | |||
| 65 | Oversea Chinese Banking Corporation Limited | 2008.8.28 | |||
| 66 | First State Investment Management (UK) Limited | 2008.9.11 | |||
| 67 | DAIWA Asset Management Co. | 2008.9.11 | |||
| 68 | Shell Asset Management Company B.V. | 2008.9.12 | |||
| 69 | T. Rowe Price International, Inc. | 2008.9.12 | |||
| 70 | EARNEST Partners, LLC | 12/13/2011 | |||
| 71 | Korea Investment Corporation | 12/28/2011 | |||
| 72 | Russell Investments Ireland Limited | 12/28/2011 | |||
| 73 | Metzler Asset Management GmbH | 12/31/2011 | |||
| 74 | HI Asset Management Co., Linmited. | 12/31/2011 | |||
| 75 | Shinhan BNP Paribas Asset Management Co., Ltd. | 1/5/2012 | |||
| Stichting Pensioenfonds voor Huisartsen | 1/5/2012 | ||||
| National Pension Service | 1/5/2012 | ||||
| Mercuries Life Insurance Co, Ltd | 1/30/2012 | ||||
| Prudential Financial Securities Investment Trust Enterprise | 1/31/2012 | ||||
| Principal Global Investors LLC | 1/31/2012 | ||||
| Hospital Authority Provident Fund Scheme | 1/31/2012 | ||||
| TransGlobe Life Insurance Inc. | 2/3/2012 | ||||
| Public Mutual Berhad | 2/3/2012 | ||||
| Meiji Yasuda Asset Management Company Ltd. | 2/27/2012 | ||||
| Cathay Life Insurance Co., LTD. | 2/28/2012 | ||||
| Sumitomo Mitsui Banking Corporation | 2/28/2012 | ||||
| Fubon Life Insurance Co. Ltd | 3/1/2012 | ||||
| American International Assurance Company,Limited | 3/5/2012 | ||||
| Neuberger Berman Europe Limited | 3/5/2012 | ||||
| KHAZANAH NASIONAL BERHAD | 3/7/2012 | ||||
| Capital Research and Management Company | 3/9/2012 | ||||
| Tokio Marine Asset Management Co., Ltd | 3/14/2012 | ||||
| Hana Daetoo Securities Co, Ltd | 3/29/2012 | ||||
| Genesis Asset Managers, LLP | 3/30/2012 | ||||
| City of London Investment Managementi Company Limited | 3/30/2012 | ||||
| JPMorgan Asset Management (UK) Limited | 3/30/2012 | ||||
| Okasan Asset Management Co., Ltd | 3/30/2012 | ||||
| Prescient Investment Management PTY LTD | 4/18/2012 | ||||
| Dongbu Asset Management Co., Ltd. | 4/20/2012 | ||||
| Janus Capital Managemente LLC | 4/20/2012 | ||||
| Mizuho Asset Management Co., Ltd. | 4/26/2012 | ||||
| Henderson Global Investors Limited | 4/28/2012 | ||||
| Eurizon Capital S.A. | 5/2/2012 | ||||
| BOCI-Prudential Asset Management Limited | 5/3/2012 | ||||
| Fullerton Fund Management Company Ltd | 5/4/2012 | ||||
| Lion Global Investors Limited | 5/7/2012 | ||||
| GENERAIL Fund Management S.A. | 5/23/2012 | ||||
| William Blair & Company, L.L.C. | 5/24/2012 | ||||
| Investec Asset Management Limited | 5/28/2012 | ||||
| ING Investment Management Aisa Pacific (Hong Kong) Limited | 6/4/2012 | ||||
| Mitsubishi UFJ Asset Management Co., Ltd | 6/4/2012 | ||||
| BOC Group Life Assurance Company Limited | 7/12/2012 | ||||
| Hall Capital Partners LLC | 8/6/2012 | ||||
| Board of Regents of The University of Texas System | 8/6/2012 | ||||
| Nan Shan Life Insurance Company, Ltd. | 8/6/2012 | ||||
| Suva | 8/13/2012 | ||||
| British Columbia Investment Management Corporation | 8/17/2012 | ||||
| Value Partners Hong Kong Limited | 8/21/2012 | ||||
| Ontario Pension Board | 8/29/2012 | ||||
| The Church Pension Fund | 8/31/2012 | ||||
| Macquarie Bank Limited | 9/4/2012 | ||||
| Andra AP-fonden | 9/20/2012 | ||||
| Hai Tong Asset Management (HK) Limited | 9/20/2012 | ||||
| IDG CAPITAL MANAGEMENT (HK) LIMITED | 9/20/2012 | ||||
| Duke University | 9/24/2012 | ||||
| Qatar Holding LLC | 9/25/2012 | ||||
| EFG Bank AG | 9/26/2012 | ||||
| Cutwater Investor Services Corporation | 10/26/2012 | ||||
| OrbiMed Advisors LLC | 10/26/2012 | ||||
| New Silk Road Investment Pte. Ltd. | 10/26/2012 | ||||
| BlackRock Asset Management North Asia Limited | 10/26/2012 | ||||
| JPMorgan Asset Management Taiwan | 11/5/2012 | ||||
| AEGON USA Investment Management, LLC | 11/5/2012 | ||||
| CDH Investment Advisory Private Limited | 11/7/2012 | ||||
| Skandinaviska Enskilda Banken AB(publ) | 11/12/2012 | ||||
| Harvest Global Investments Limited | 11/12/2012 | ||||
| Greystone Managed Investments Inc. | 11/21/2012 | ||||
| Uni-President Assets Management Corporation | 11/21/2012 | ||||
| Daiwa SB Investments Ltd. | 11/19/2012 | ||||
| APS Asset Management Pte Ltd | 11/27/2012 | ||||
| CITIC Securities International Investment Management (HK) Limited | 12/11/2012 | ||||
| Pacific Alliance Investment Management (HK) Limited | 12/11/2012 | ||||
| E Fund Management (Hongkong) Co.,Limited | 12/11/2012 | ||||
| Hillhouse Capital Management Pte. Ltd. | 12/11/2012 | ||||
| Reference: www.csrc.gov.cn/;www.china-xbr.com/ | |||||
See also
- Qualified Domestic Institutional Investor (QDII)
- State Administration of Foreign Exchange (SAFE)
- Economy of China
- Chinese financial system
- Banking in China
References
- Zhao, Samuel. "A Guide to the Qualified Foreign Institutional Investors Scheme for Navigating Investment into China" (PDF).
- Zhao, Samuel. "A Guide to the Qualified Foreign Institutional Investors Scheme for Navigating Investment into China" (PDF).
- China further loosens its capital controls - International Herald Tribune (August 20, 2007). Retrieved on January 21, 2009.
- Legg Mason Seeks China License to Trade Yuan-Denominated Stocks - Bloomberg (March 10, 2009). Retrieved on March 10, 2009.
- Chiu, Jeckle, et al. "New RQFII Rules Announced: New Ways to Use Offshore RMB - Part II", Mayer Brown (law firm) web post, 4 January 2012. Retrieved 2012-04-10.
- Stephen, Craig, "China’s welcome mat for foreign investors", MarketWatch, April 8, 2012. Retrieved 2012-04-10.
- Sweeney, Pete, "China approves new yuan ETFs in Hong Kong", Reuters, April 19, 2012. Retrieved 2012-04-19.
- https://www.reuters.com/article/2013/04/09/china-investment-qfii-idUSL3N0CI10A20130409
- "UPDATE 1-China raises foreign institutional investor quota by $3 bln in Feb".
- 合格境外机构投资者境内证券投资管理办法, xinhuanet.com, 2006年08月26日.