China doubles quota for foreign investors, paving way for global funds to get bigger bite of A-shares amid stock market slump
- The government to double the combined quota under the qualified foreign institutional investors (QFII) programme to US$300 billion
- Beijing is still selective in opening up, as it prefers capital inflow channels over outflow ones
China will double the quota for overseas investors in the country’s equities, opening the way for global funds to get a bigger bite of A-shares traded in Asia’s second-largest stock market as the government extends an olive branch amid talks to end a trade war with the United States.
“This can be seen as China making a genuine gesture to further liberalising its capital market to facilitate the trade war negotiations with the US,” said Commerzbank’s senior economist Zhao Hao.
“It reflects China’s desire to reduce tensions with the US towards resolving the trade issues, as the lack of market access has been one of the sticking points,” said Aidan Yao, senior emerging Asia economist at AXA Investment Managers.
China has been introducing more financial opening up measures since last year, as a dispute with the United States has heated up. The world’s largest economy is demanding fairer trade policies, greater market access and intellectual property protection, and a more level playing field for foreign companies.
Beijing has promised that within three years it will fully scrap restrictions on foreign ownership in the financial service industry, including in banking and insurance.