The State Administration of Foreign Exchange (SAFE) has approved
investment quotas for three QFIIs (qualified foreign institutional
investor), bringing the remaining quota to be allocated for QFII
trial operations on Chinese markets to less than US$500
million.
The SAFE will likely replenish the total quota this year,
industry observers said on Thursday.
China ushered in a QFII system in 2003. With the approval of the
State Council, the total investment quota for QFII operations
increased from four billion to ten billion US dollars in September
2005.
The SAFE announced that three QFIIs obtained quotas of US$500
million in total. They are the first group to acquire quotas this
year.
The three were GE Asset Management Co., UBS Global Asset
Management (Singapore) Co., and the Belgium-based Fortis Bank. To
date, 46 of the 52 QFIIs registered have obtained quotas.
GE was approved to open a foreign-exchange account and an RMB
special account with the Shanghai Branch of HSBC. UBS was allowed
to open a forex account and an RMB special account with the
Citibank Shanghai branch, the sources said.
Industry observers believe a quota expansion is inevitable. They
say the threshold will possibly be lowered for QFII business this
year, with five billion to 10 billion US dollars to be added to the
total investment quota.
(Xinhua News Agency January 19, 2007)