China investors swap QFIIs for stock connects

Author: Brian Yap | Published: 9 Feb 2017

Foreign investors under the Qualified Foreign Institutional Investor (QFIII) programme are believed to be deserting their hard-earned quotas for China’s second Stock Connect with Hong Kong.

The State Administration of Foreign Exchange (Safe) relaxed the QFII programme last year by scrapping a requirement that at least half the assets in QFII accounts must be equity-based. The foreign exchange regulator also shortened the one-year initial lock-up of the principal investment for QFIIs to three months.

But a combination of stricter forex controls, currency risks and quota allocation standards have pushed foreign investors to tap the two Stock Connects in the former British colony.

"The heavy expenses associated with the QFII programme and the strict rules on the repatriation of funds under it have pushed qualified foreign investors to tap the southbound link of the Shenzhen-Hong Kong Stock Connect," said Enoch Wong, partner at Dentons in Hong Kong....



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