Doors open for more overseas yuan
Quota approved for new tranche of offshore yuan for foreigners to invest in mainland
Beijing has reopened the door for offshore holders of yuan to invest in the mainland's stocks and bonds, by granting more quota under the renminbi qualified foreign institutional investor (RQFII) scheme.
The Hong Kong office of China Asset Management, the mainland's largest mutual fund house, said it had obtained a fresh 2 billion yuan (HK$2.52 billion) of quota. It is the first institution that has been allowed to increase its purchases of mainland shares and debt under the programme.
The approval by the State Administration of Foreign Exchange marked the start of Beijing's efforts to bring a total of 200 billion yuan from Hong Kong to the mainland markets.
The RQFII scheme allows mainland and foreign institutions' Hong Kong subsidiaries to raise offshore yuan to invest in mainland stocks and bonds.
The previous 70 billion yuan quota was used up in January. Investors were expecting the regulator to begin granting the additional 200 billion yuan quota it announced late last year.
The granting of the new RQFII quota, which should help shore up liquidity in the weak A-share market, reflects mainland regulators' mounting worries about a further market downturn.