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
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....