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SFC approves first ROFII products

01-05-2012 11:35 BJT

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Hong Kong's securities regulator has approved the first batch of Renminbi Qualified Foreign Institutional Investors, or RQFII products, on the last trading day of 2011. That means individual investors can now buy Chinese mainland stocks and bonds, using offshore yuan. Meanwhile, the State Administration of Foreign Exchange has allocated over half its initial investment quota for the program to 10 investment firms.

China launched the RQFII scheme on December 16th last year. On the final trading day of 2011, China’s foreign exchange regulator granted its first batch of investment quotas, totaling 10.7 billion yuan, or 1.7 billion U.S. dollars, to 10 license holders. The scheme provides a channel for offshore yuan to flow back into the mainland. On the same day, Hong Kong’s Securities and Futures Commission gave the go-ahead to four funds from Hong Kong subsidiaries of Chinese fund management companies to invest back into the onshore market.

Alexa Lam, deputy CEO of HK Securities & Futures Commission said: "The RQFII scheme has long been anticipated by Hong Kong. Three or four years ago, we suggested the plan to the mainland securities regulator. Investors are very glad it has finally been put in place."

Renminbi deposits in Hong Kong are currently in excess of 618 billion yuan. Ordinary Hong Kong investors now have a new option for their yuan deposits, as the RQFII products are expected to be open to institutional and individual investors.

Lam said: "Individual investors can’t buy renminbi-denominated bonds, and they need investing channels. The newly-approved funds can meet their demand, therefore they have large room to develop."

Licensed securities firms in Hong Kong are expected to release RQFII products later this month.

Wen Tianna, CEO of China Merchants Securities HK said: "We have done enough preparation. We may release the products in the first quarter of this year. If the market welcomes the four funds, we could launch the products as early as this month."

To date, nine Chinese fund management companies and 12 securities firms in Hong Kong have been awarded licenses to offer the new products. The initial quota for the pilot RQFII program is capped at 20 billion yuan. 80 percent of the quota will be allowed to invest in the mainland’s fixed-income markets, while the rest will be allowed to enter the stock markets.

 

 

Editor:Zhang Rui |Source: CNTV.CN

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