Date
23 September 2017
RQFII quotas for A-share tracking ETFs in Hong Kong are being underutilized. Photo: Bloomerg
RQFII quotas for A-share tracking ETFs in Hong Kong are being underutilized. Photo: Bloomerg

RQFII quota for tracking A-shares laid idle by many funds

Most of the quota granted for investment in Hong Kong’s yuan-denominated exchange-traded funds that track the performance of China’s A-shares under the mainland’s Renminbi Qualified Foreign Institutional Investor (RQFII) program is not being used up, the Shanghai Securities News reported Wednesday.

Except for CSOP Asset Management’s A50ETF, more than half of other funds’ RQFII quota has been idled, the paper said, citing data from the Hong Kong bourse.

China AMC and E Fund Management have recently applied to the State Administration of Foreign Exchange — China’s forex regulator– to cut their investment quota for A-share ETFs by 2 billion yuan (US$325.2 million) each and allow the firms to invest that money in alternative products, the report said.

China AMC is said to have used just 45 percent of its 14 billion yuan quota, while E Fund has more than 70 percent of its 5 billion yuan quota being idled.

A fund manager was quoted as saying that he hopes regulators will grant institutions more freedom in terms of investment destinations using RQFII quota, and not limiting to a specific investment target.

The RQFII program, which was launched in 2012, allows qualified entities to invest yuan funds raised in Hong Kong directly in the mainland bond and equity markets.

– Contact HKEJ at [email protected]

KZ/AC/RC

EJI Weekly Newsletter

Please click here to unsubscribe