Beijing approved a new foreign institutional investor to buy mainland-listed securities after a one-year break, hoping to reassure investors that overseas demand for mainland assets is still strong.
But analysts said the move, part of efforts to buoy the troubled A-share market, would not pay off due to the small size of foreign funds.
Hu Xiaolian, the nation's top foreign currency regulator, said on Thursday that a government fund had been granted a licence to buy mainland securities under the qualified foreign institutional investor scheme, without identifying the investor.
Reuters reported it was Norway's government pension fund and that it would start a new round of foreign purchases of A shares after the country announced a tripling of its QFII quota to US$30 billion in December last year.
The Norwegian fund was given a US$200 million quota, according to Reuters.
'It is a small gesture to show that the A-share outlook remains positive because mainland stocks can still woo foreign institutions,' said Zhou Liang, research head of fund consultancy Lipper.
'The approval of a sovereign wealth fund also implies that China can draw fresh foreign funds even though existing QFII's lack buying interest.'