China resumes quotas for overseas investment scheme
Helen Ding and Kirby Chien
Reuters
Shanghai, China
Saturday, 24 October 2009, 9:39pm CCT
® Overseas investment scheme quotas resumed after 17 months
® Worries over overseas markets ease, capital inflows rising
® EFund Management gets US$1 billion QDII quota
China has resumed issuing quotas under its scheme to allow domestic investors to put money into overseas markets after a 17-month halt as global markets stabilise and it
seeks ways to
channel its mounting
foreign exchange reserves.
EFund Management Co has been issued a $1 billion quota by the State Administration of Foreign Exchange , China's foreign exchange regulator, under the country's Qualified Domestic Institutional Investor scheme, a company executive said.
"China's foreign exchange reserves are growing very rapidly, so there should continue to be issuance of additional quotas," the executive said, speaking under condition of anonymity.
China is expected to see rising capital inflows in the second half of this year as expectations mount for appreciation of its yuan currency, and authorities are keen to
seek ways to
channel funds abroad.
The government started the QDII programme in 2006 to allow Chinese money to be invested abroad, but early investors suffered badly from the global financial crisis.
China effectively halted the issuance of new
QDII quotas following the last approval in May 2008, reflecting the worsening performance of QDII funds as global market conditions deteriorated.
Investor confidence has picked up in recent months, however, as global stock markets rebounded on hopes that the worst of the financial crisis and economic downturn are over.
The EFund executive said late on Friday that the company was aiming to sell funds focusing on
equities in Asia excluding Japan, with a formal product launch expected in December.
China had granted QDII licences to 27 fund management companies, but only nine issued QDII products after receiving a combined quota of $29.5 billion.
SAFE had issued $55.95 billion in QDII quotas to 56 institutions, including other financial institutions as well as fund companies, as of the end of September, according to its website.