China to relax rules on foreign investment

BEIJING: China will soon relax rules for qualified foreign investors when they channel their offshore yuan holdings into China's securities market, the official Xinhua news agency said yesterday.

Under the revised rules, Renminbi Qualified Foreign Institutional Investors (RQFII) will no longer be required to put at least 80 per cent of their funds into the domestic fixed income market, Xinhua said, citing market regulator the China Securities Regulatory Commission.

"It means there will be more funds entering the (onshore)stock market," Xinhua said, adding that the market regulator has already finished modifying the rule.

The new rule, which will be implemented soon, will allow more institutional investors to join the scheme, which is limited to securities brokerages and investment funds.

China introduced the RQFII scheme with an initial quota of 20 billion yuan (RM9.95 billion) in late 2011, with each firm allowed to put no more than 20 per cent in the onshore stock market and the remainder invested in fixed income.

The quota was raised by 50 billion yuan last April, with the entire amount to be invested in the stock market through exchange-traded funds. Reuters