NewChina loosens capital outflow to restore foreign investors’ confidence
Foreign funds holding their purse strings tight amid China’s recent tightening on capital accounts, statistics show
Chinese financial regulators have relaxed restrictions on both capital inflow and outflow for foreign funds in a bid to restore the confidence of foreign investors after Beijing’s recent capital account tightening fuelled concerns about official policies.
Operators of the Qualified Foreign Institutional Investor (QFII) schemes, mainly overseas funds with QFII licenses and an aggregate quota of US$81 billion to trade China’s domestic stock and bond markets, will be granted greater freedom to withdraw their money from China, and each operator will no longer be subject to a fixed investment quota, the State Administration of Foreign Exchange (SAFE), China’s foreign currency gate keeper, said on its official website on Thursday.
“The lock-up period for a QFII fund is cut to three months from one year... and the money they withdraw from China should be below 20 per cent of their assets in China,” the document said, noting it is already effective.
Statistics show overseas investors are putting less money into the Chinese markets in recent months, despite Beijing’s attempt to encourage offsetting inflows, as its recent tightening measures in fighting capital flow scared some offshore investors, analysts say.
From Thursday, mainlanders using UnionPay debit and credit cards to purchase insurance products overseas will face caps of US$5,000 per transaction, as Beijing unveiled a new rule to curb capital outflows.
Iris Pang, a senior economist for greater China at Natixis SA in Hong Kong, said it was a “loosening signal” from the authorities.