Beijing Scraps Limits On Securities Investments

Beijing on Tuesday removed limits on foreign institutions wanting to invest in mainland stocks and bond markets, as it seeks to attract overseas investment amid a slowing economy and a trade spat with the United States.

Foreign individuals are barred from investing directly in mainland markets, but the country allows certain institutions to buy shares under the so-called Qualified Foreign Institutional Investor (QFII) scheme.

The State Administration of Foreign Exchange (Safe) said on Tuesday it had removed the overall ceiling of US$300bn on total asset purchases under this scheme, offering unfettered access to the world's second-largest capital market.

A cap on a yuan-denominated sister scheme – the Renminbi Qualified Foreign Institutional Investor (RQFII) programme, which allowed overseas institutions to invest in Chinese securities using the offshore yuan – was also removed on Tuesday.

"Foreign institutional investors with the relevant qualifications can remit funds to carry out investment in securities in compliance with regulations, greatly enhancing the convenience for foreign investors participating in the onshore financial market," the regulator said in a statement.

The regulator said it was also seeking permission from the State Council to scrap administrative licences needed by foreign investors to purchase stocks and bonds.

The moves aim to "facilitate foreign investors to invest in the domestic securities market and enhance the depth and breadth of China's financial market opening," said Wang Chunying, a spokeswoman for Safe.

Just over one-third of the US$300 billion QFII investments quota had been used by end August, according to Safe data.

Wang said that a yuan-denominated investment scheme, or RQFII programme, will now be open to all overseas institutional investors that meet certain requirements. Earlier it was only available to investors from certain countries or regions on a pilot basis.