More easing in QFII and RQFII likely

The mainland's investment schemes that allow foreign investors to trade its stocks and bonds are expected to see big changes in the coming months, with some key obstacles to be removed to help Beijing attract more capital.

Beijing relaxed the quota limit for the qualified foreign institutional investor scheme last month, and market players expect further relaxation of the programme, which was rolled out in 2002 and totalled US$72.1 billion at the end of last month.

On March 26, Fidelity became the first asset manager permitted to operate in QFII with a quota in excess of US$1 billion. Beijing later granted a renminbi qualified foreign institutional investor quota, which allows offshore yuan to be invested back in the mainland, for the first time to a major global alternative investment manager, KKR.

"There should be no question that radical change is under way for both QFII and RQFII," Shanghai-based research house Z-Ben Advisers said, "so radical, in fact, that we now project all remaining QFII quota, just above US$75 billion, will be fully issued prior to the end of 2015."

Some market players suspect the regulator plans to merge the QFII and RQFII schemes. But others say the reforms will be implemented separately to make the two schemes more tailor-made for their targeted investors.

"Combining the two, you actually get the best of both … there are some aspects of the regulations that are more relaxed in QFII and some are more relaxed in RQFII," said Nicole Yuen, the China chief operating officer for Credit Suisse.