China will extend its renminbi qualified foreign institutional investor (RQFII) program to Singapore, granting it an aggregate quota of 50 billion yuan (US$8.16 billion), the Monetary Authority of Singapore (MAS) said in an emailed statement on Tuesday.
The move will allow qualified Singapore-based institutional investors to channel offshore renminbi from Singapore into China’s securities markets, the MAS said. RQFII license holders may also use their quotas to issue renminbi investment products to the broad pool of investors in Singapore.
This came after the central government granted Britain an 80 billion yuan RQFII quota on Oct. 15.
Singapore and China on Tuesday agreed on new initiatives to strengthen cooperation on financial sector development and regulation. The agreement was reached at the 10th Joint Council for Bilateral Cooperation, co-chaired by Singapore Deputy Prime Minister Teo Chee Hean and Chinese Vice Premier Zhang Gaoli.
The RQFII scheme will help diversify the base of investors in China’s capital markets and promote the adoption of the renminbi for investment, said the MAS.
Singapore is also being considered as one of the investment destinations under the new renminbi qualified domestic institutional investor (RQDII) scheme, which will allow qualified Chinese institutional investors to use renminbi to invest in Singapore’s capital markets, it said.
Also, the two countries will introduce direct trading between the Chinese yuan and the Singapore dollar. Details of the currency trading scheme will be announced later, it said. New measures are being studied to allow cross-border flows of renminbi between Singapore and Suzhou Industrial Park as well as Tianjin Eco-City.
“These initiatives would not have been possible without the excellent relations between MAS and our central bank and regulatory counterparts in China,” Ravi Menon, MAS managing director, said in the statement.
Financial ties between the two countries have deepened considerably and Singapore is well placed to promote greater use of the renminbi in international trade and investment in the years to come, Menon said.
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