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ANZ analysts point out that Chinese authorities had announced on 10 September, the cancellation of 1) the overall quota of QFII and RQFII, 2) the pre-approval of quotas for individual foreign investors and 3) the restriction of pilot regions for RQFII.

Key Quotes

“Offshore institutional investors will largely benefit from this move, as they are able to invest onshore markets only subject to the qualification examination by the CSRC thereafter. PBoC and SAFE will focus on the macro prudence of cross border flows.”

“This move is to equalise the administration requirements of different investment channels, as Bond Connect has no such restriction. We expect the authority will further simplify existing investment channels to facilitate foreign investors.”

“Capital inflows will not jump in short term as SAFE has never refused the quota requests before on the back of local currency depreciation. In the long-run, we expect more capital inflows as RMB assets have been included in major indexes with increasing weights.”