RQFII quota gains 15.6b yuan boost for month

Beijing granted a large amount of quota last month for the scheme that raises offshore yuan to invest in the mainland's bond and stock markets, in an effort to bolster slumbering A shares while encouraging foreigners to hold the local currency.

The State Administration of Foreign Exchange (SAFE) said it approved a combined 15.6 billion yuan (HK$19.6 billion) of renminbi qualified foreign institutional investor (RQFII) quota in May, the biggest amount this year.

It was a clear sign the mainland regulators are trying to speed up capital inflows to underpin the weak market.

Beijing embarked on the RQFII programme in 2011 on a trial basis, allowing Hong Kong subsidiaries of mainland brokerages and fund managers to launch yuan-denominated funds offshore to invest in mainland stocks and bonds.

The initial quota of 70 billion yuan in aggregate was used up earlier this year, before Beijing began to issue fresh quotas in late April.

A total 200 billion yuan of new RQFII quota will be granted in the expanded programme.

The regulators now also allow foreign institutions and Hong Kong subsidiaries of mainland banks and insurers to take part in the expanded scheme.