China to extend RQFII scheme to Hong Kong
HKMA says eligibility will be relaxed to include HK-based financial institutions
The mainland is expected to extend the renminbi qualified foreign institutional investor (RQFII) scheme to Hong Kong-based financial institutions, the city's de facto central banker said in Beijing yesterday.
Norman Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, said China Securities Regulatory Commission (CSRC) chairman Guo Shuqing pledged his support for the relaxation of the eligibility requirements. The scheme is limited at present to overseas units of mainland financial institutions.
Chan started a two-day visit to Beijing yesterday, leading a delegation of the Hong Kong Association of Banks, after visiting Shanghai on Wednesday. He met Guo and China Banking Regulatory Commission (CBRC) chairman Shang Fulin yesterday.
Any relaxation of the rules would be subject to further discussion among other authorities, Chan said.
"We can't estimate the time frame, but we hope that the qualification of applicants could be clarified when the new quota is granted," he said.
Guo said last month policymakers had "agreed in principle" to expand the RQFII quota by 200 billion yuan (HK$247.7 billion) from 70 billion yuan.
Chan said the CSRC was flexible about the investment quota and would likely consider a further increase.
"Not only Hong Kong investors, but many foreign investors are also interested in investing in yuan-denominated assets using Hong Kong as a platform," Chan said.
The RQFII programme, launched in December last year, allows yuan-based funds that raise money in Hong Kong to invest in the mainland.
Equity investments are now capped at 20 per cent of the fund, and the remaining 80 per cent is limited to bond investment.
"Chairman Guo has also agreed to withdraw or loosen the restriction to provide more flexibility for the fund," Chan said.
Anita Fung Yuen-mei, chairwoman of the association, said the banking industry welcomed a relaxation of the RQFII scheme.
She said yuan-denominated deposits in Hong Kong - more than 670 billion yuan - would be adequate to support further expansion of the programme.