Mainland and overseas commercial banks licensed under the qualified domestic institutional investor programme will be allowed to put up to half of their QDII quotas in equity funds authorised by the Securities and Futures Commission, regulatory sources said.
It would be the first time that the banks can invest QDII funds in stocks.
The new rule would apply to new quotas and unused existing quotas, a regulatory source said. That means about US$6.3 billion may be invested in the local fund market, based on the current US$12.61 billion worth of unused quotas.
'The importance is more on the recognition of the quality of Hong Kong's regulators and intermediaries than in the numbers,' the source said.
The China Banking Regulatory Commission on Monday said it would expand the scope of the QDII programme this year to more investment vehicles other than bonds to enhance investment returns.
Only about 3 per cent of the US$13 billion in QDII quotas has been invested since the programme was launched in April last year because it only allows commercial banks to convert yuan for overseas investments in low-return bond products.
A memorandum of understanding signed between the two regulators on Monday allows them to exchange information. The move would pave the way for QDII money to be invested in most of the 1,829 SFC-authorised funds, a source close to the SFC said.
