Singapore's quota for investment in China doubled to 100 billion yuan

Asset manager interest in Chinese instruments spurs rise in amount to 100 billion yuan

PUBLISHED : Tuesday, 10 November, 2015, 12:13am
UPDATED : Tuesday, 10 November, 2015, 12:13am

Singapore's renminbi qualified foreign institutional investor quota for investment in Chinese financial markets will be doubled in a move aimed at strengthening cross-border flows in the yuan between the two countries, Singapore's central bank said on Monday.

The Monetary Authority of Singapore said the city state's quota under the RQFII scheme would be increased to 100 billion yuan from 50 billion yuan.

The RQFII programme is the yuan-denominated version of the qualified foreign institutional investor scheme, which was created by China to allow foreigners to invest in Chinese capital markets.

"This is in response to the strong interest by Singapore-based asset managers and investors to invest in China," MAS said.

The announcement came in the wake of a state visit by President Xi Jinping to Singapore last week to mark 25 years of formal diplomatic relations between the two countries.

MAS said China and Singapore also agreed to extend to Chongqing municipality the same cross-border yuan initiatives that were now in place for Suzhou and Tianjin.

"This means, for example, that Singapore-based banks will be allowed to lend [yuan] to companies in Chongqing and Chongqing-based companies may issue [yuan] bonds in Singapore and fully repatriate the proceeds," it said.

In addition, MAS said it had agreed with the People's Bank of China to renew and enhance the bilateral currency swap agreement established between the two central banks.

The existing swap agreement was signed in March 2013 and is due to expire in March next year, MAS said.

Under the current arrangement, up to 300 billion yuan in yuan liquidity can be made available to eligible financial institutions operating in Singapore, while up to S$60 billion in Singapore dollar liquidity can be made available to eligible financial institutions in China.