In­vest­ment quota

Euro­pean na­tion gets quota of $12.9b to in­vest in Chi­nese fi­nan­cial mar­kets

China Daily (Latin America Weekly) - - Front Page - By YANG ZI­MAN yangz­i­man@chi­nadaily.com.cn

China has of­fi­cially granted $12.9 bil­lion quota of in­vest­ment to France un­der the Ren­minbi Qual­i­fied For­eign In­sti­tu­tional In­vestor pro­gram.

China has of­fi­cially granted 80 bil­lion yuan ($12.9 bil­lion) quota of in­vest­ment to France un­der the Ren­minbi Qual­i­fied For­eign In­sti­tu­tional In­vestor pro­gram, a spokesman for the China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion said on Fri­day.

The ex­pan­sion is based upon the joint dec­la­ra­tion be­tween China and France signed in March. France is the sec­ond Euro­pean coun­try to gain RQFII quota af­ter the United King­dom.

RQFII, launched in 2011, al­lows for­eign in­vestors to in­vest off­shore yuan in Chi­nese stocks, bonds and money-mar­ket prod­ucts. Cur­rently in­vestors in Hong Kong, Lon­don, Sin­ga­pore and France can ap­ply for the pro­gram.

As of now Hong Kong, Lon­don, Sin­ga­pore and France are cov­ered by the RQFII. Hong Kong holds the largest RQFII quota of 270 bil­lion yuan, while Lon­don and Sin­ga­pore have quo­tas of 80 bil­lion yuan and 50 bil­lion yuan re­spec­tively.

Till date, the RQFII quota cov­ers 480 bil­lion yuan. As of the end of May, 78 over­seas

The RQFII quota as­signed to France will be con­ducive to the in­ter­na­tion­al­iza­tion of ren­minbi and the ex­pan­sion of the in­vest­ment chan­nels of yuan funds raised in France.” GUO TIANY­ONG, PRO­FES­SOR OF FI­NANCE, CEN­TRAL UNIVER­SITY OF FI­NANCE AND ECO­NOM­ICS

fi­nan­cial in­sti­tutes have ob­tained the ap­proval of RQFII for value amount­ing to 240 bil­lion yuan.

Zhang Xiao­jun, spokesman for CSRC, said that the pi­lot pro­grams of RQFII have been run­ning smoothly, con­tribut­ing sig­nif­i­cantly to the growth of the off­shore ren­minbi mar­ket and boost­ing the open­ing up of Chi­nese do­mes­tic cap­i­tal mar­ket to the rest of the world.

“The RQFII quota as­signed to France will be con­ducive to the in­ter­na­tion­al­iza­tion of ren­minbi and the ex­pan­sion of the in­vest­ment chan­nels of yuan funds raised in France,” saidGuoTiany­ong, a pro­fes­sor of fi­nance at Cen­tral Univer­sity of Fi­nance and Eco­nom­ics.

“It will also help broaden the chan­nels for yuan in the off­shore mar­ket to flow back to the main­land,” he said, “there­fore en­cour­ag­ing them to hold the cur­rency, which will in turn pro­mote the circulation of the cur­rency around the world.”

The an­nounce­ment is among a se­ries of mea­sures by China to achieve its long-term goal to in­crease the at­trac­tive­ness of the yuan as an in­ter­na­tional cur­rency. On Tues­day, Chi­nese Pre­mier Li Ke­qiang, dur­ing a visit to the UK, said that the Lon­don branch of China Con­struc­tion Bank has been des­ig­nated as a ren­minbi clear­ing bank.

CCB Lon­don, of­fer­ing con­ve­nient and se­cured ren­minbi off­shore clear­ing ser­vices, aims to ex­pand an ac­tive and or­dered ren­minbi pric­ing mech­a­nism for com­modi­ties, said a state­ment re­leased af­ter the an­nounce­ment.

The stocks held by qual­i­fied for­eign in­sti­tu­tional in­vestors in the Shang­hai and Shen­zhen stock ex­changes ac­counted for less than 2 per­cent of the to­tal stocks, which is much lower than the per­cent­age in de­vel­oped coun­tries, said Lu Song­bin, a re­searcher at the CSRC, in his anal­y­sis of China’s lat­est fi­nan­cial re­form mea­sures.

“The com­mis­sion will take mea­sures to in­crease the scope of qual­i­fied for­eign and do­mes­tic in­sti­tu­tional in­vestors,” he said, “The com­mis­sion will also con­sider for­mu­lat­ing reg­u­la­tions for in­di­vid­ual for­eign in­vestors to buy shares in China and will run pi­lot pro­grams in this re­gard.”

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