SHANGHAI–China has allowed a broader variety of financial institutions offshore to invest in domestic capital markets with yuan raised offshore, the country’s securities regulator said late Wednesday, in a long-anticipated move to open its market wider to foreign investors.
Under amended rules released Wednesday, China Securities Regulatory Commission said it has expanded the so-called Renminbi Qualified Foreign Institutional Investors, or RQFII, program, to include Hong Kong units of Chinese banks and insurers, as well as financial institutions registered and operated in Hong Kong.
Previously, China restricted participants to Hong Kong units of Chinese fund management companies and securities companies when it launched the program in December 2011.
The expansion is part of Beijing’s effort to further open the capital account and promote the yuan’s international status. It will also help channel more much-needed funds to domestic capital markets, especially the lackluster stock markets.
Under the new rules, which took effect at their release, the regulator also eased restrictions on the investment of RQFIIs, permitting foreign investors to invest in a wider variety of financial instruments, including stock index futures.
An individual foreign investor is allowed to hold a stake of up to 10% in any listed firm in China’s yuan-denominated A-share market, while the ceiling on combined stakeholding by all foreign investors is at 30%, the CSRC said.
China has quickly expanded the investment quota for RQFIIs over the past two years, raising it to 270 billion yuan ($43.0 billion) from an initial CNY20 billion. Of the total, CNY70 billion worth of quota has been granted to 24 foreign investors as of the end of January.
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