Beijing Eases Foreign Investor Limits as Part of Ongoing Drive to Open Financial Sector

Beijing Eases Foreign Investor Limits as Part of Ongoing Drive to Open Financial Sector

Xu Wei

Date: Wed, 06/13/2018 - 19:56 / source:Yicai
Beijing Eases Foreign Investor Limits as Part of Ongoing Drive to Open Financial Sector
Beijing Eases Foreign Investor Limits as Part of Ongoing Drive to Open Financial Sector

(Yicai Global) June 13 -- China’s forex regulator has unveiled new rules to ease restrictions on qualified foreign bond and stock investors as Beijing continues its plight to broaden access to the world’s second-biggest financial sector.

The State Administration of Foreign Exchange will can the 20-percent repatriation limit under the dollar-based Qualified Foreign Institutional Investor program, and remove the three-month lockup periods for the scheme and its yuan-denominated counterpart, it said yesterday in a document issued in tandem with the central bank. The new rules took effect immediately.

Lifting the restrictions will streamline operations, unleash passionate investors on the market and advance the bilateral opening up of domestic capital markets, said an official at SAFE.

The dollar-based QFII program grants licensed overseas investors access to China’s yuan-based capital market, while its sister scheme (known as the RQFII) lets institutions invest in the mainland’s onshore market using offshore yuan deposits. Participants in both will also be able to make forex hedges on the mainland under the new rules, to offset risk against moving exchange rates.

China has been pushing hard to open up its financial market, often criticized for its inaccessibility, and has accumulated some success so far this year. Foreigners increased their holdings in Chinese government securities for a 16th straight month in May, and more than 200 mainland-listed shares made their way into the MSCI Emerging Markets Index at the end of last month.

Editor: James Boynton

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Keywords: qfii, RQFII, SAFE, Finance, pboc, Forex, Bonds, SHARES