Industrial and Commercial Bank of China has raised 4.45 billion yuan from its first qualified domestic institutional investor (QDII) product that gives access to shares overseas. The new product accounts for more than 25 per cent of the US$2 billion QDII quota ICBC received in July last year, reflecting mainland investors' interest in buying Hong Kong-listed shares as the domestic market has turned more volatile. The QDII scheme, which allows banks and fund managers to invest clients' money in overseas markets, was launched last year to help reduce the mainland's growing foreign reserves and amid pressure to revalue the yuan. But only a small percentage of the quota had been used before the expanded scheme was introduced, as banks could buy only fixed-income and other low-yield products, making it difficult to lure mainland investors who are more interested in the surging local stock market. ICBC was the first firm to raise yuan-denominated capital to invest in overseas equities after the China Banking Regulatory Commission lifted the ban in May. The bank said it was working on another fund to be launched this month that would also invest in offshore stock markets. Some foreign lenders, including HSBC and Citibank, have also used their QDII quota to launch new products since the ban was lifted. The relaxation was part of Beijing's measures to divert hot money from the domestic market, which became more volatile after the government tripled stamp duty on stock transactions on May 30. Some analysts said the outflows caused by the extended QDII scheme were insignificant compared with the liquidity flooding the mainland. They said the QDII relaxation was the main reason for the surge in the Hang Seng Index last month on anticipation that mainland capital would be invested in H shares which were trading way below their A-share counterparts. Fund managers and brokerages have also been allowed to invest in overseas shares from Thursday. Insurers are expected to be permitted to do so in the next few months. ICBC said the first fund, whose sale was completed on June 29, would invest as much as 50 per cent of the money raised in Hong Kong-listed red chips, H shares and new offerings. The rest of the proceeds will be used to buy Asian fixed-income products to help offset the exchange loss arising from this foreign currency-denominated product in view of the yuan's appreciation.