BROWSE

Qualified Foreign Institutional Investor – QFII

Definition

The Qualified Foreign Institutional Investor program, one of the first efforts to internationalize the RMB, represents China's effort to allow, on a selective basis, global institutional investors to invest in its RMB denominated capital market. Once licensed, foreign investors are permitted to buy RMB-denominated "A shares" in China's mainland Shanghai and Shenzen stock exchanges. Thus foreign investors benefit from an opportunity to invest onshore, which is otherwise often insulated from the rest of the world, and subject to capital controls governing the movement of assets in-and-out of the country.

Qualified Foreign Institutional Investor - QFII

What is 'Qualified Foreign Institutional Investor - QFII'

A program that permits certain licensed international investors to participate in China's mainland stock exchanges. The Qualified Foreign Institutional Investor program was launched by the People's Republic of China in 2002 to allow foreign investors access to its stock exchanges in Shanghai and Shenzhen. Prior to QFII, foreign investors were not able to buy or sell shares on China's stock exchanges because of China's tight capital controls. With the launch of the QFII program, licensed investors can buy and sell yuan-denominated "A" shares. Foreign access to these shares is limited by specified quotas that determine the amount of money that the licensed foreign investors are permitted to invest in China's capital markets.

Explaining 'Qualified Foreign Institutional Investor - QFII'

As of April, 2012, the combined quota for the Qualified Foreign Institutional Investor program was set at U.S. $80 billion. The quotas are granted by SAFE - China's State Administration of Foreign Exchange, and the quotas can be adjusted to reflect and respond to the country's economic and financial situation. Type of investments include listed stocks (excluding foreign-oriented, or "B" shares); Treasury bonds, corporate debentures and convertible bonds, and other financial instruments approved by the China Securities Regulatory Commission (CSRC). To be approved as a licensed investor, certain qualifications must be met (qualifications are dependent upon the type of investor - such as fund management companies and insurance companies). For example, fund management companies are required to have a minimum of five years of experience in assets management and must have managed at least U.S. $5 billion in securities assets in the most recent accounting year. A specified amount of foreign currency, transferred and converted to local currency, is also required for approval.


Further Reading


Foreign investment in China and qualified foreign institutional investor (QFII)
link.springer.com [PDF]
… the Chinese authorities decided at the end of 2002 to allow selected Qualified Foreign Institutional Investor (QFII) to … At the end of 2007, the State Administration of Foreign Exchange announced that the … With the increase in total quota, approval of qualifications for QFII by China …

Qualified foreign institutional investor ownership deregulation and the restatement of financial reports---empirical findings from TaiwanQualified foreign institutional investor ownership deregulation and the restatement of financial reports---empirical findings from Taiwan
www.sciencedirect.com [PDF]
… the Chinese authorities decided at the end of 2002 to allow selected Qualified Foreign Institutional Investor (QFII) to … At the end of 2007, the State Administration of Foreign Exchange announced that the … With the increase in total quota, approval of qualifications for QFII by China …

Do qualified foreign institutional investors herd in Taiwan's securities market?Do qualified foreign institutional investors herd in Taiwan's securities market?
www.tandfonline.com [PDF]
… the Chinese authorities decided at the end of 2002 to allow selected Qualified Foreign Institutional Investor (QFII) to … At the end of 2007, the State Administration of Foreign Exchange announced that the … With the increase in total quota, approval of qualifications for QFII by China …

China's qualified foreign institutional investor and qualified domestic institutional investor programsChina's qualified foreign institutional investor and qualified domestic institutional investor programs
ideas.repec.org [PDF]
… the Chinese authorities decided at the end of 2002 to allow selected Qualified Foreign Institutional Investor (QFII) to … At the end of 2007, the State Administration of Foreign Exchange announced that the … With the increase in total quota, approval of qualifications for QFII by China …

Domestic and foreign institutional investors' behavior in ChinaDomestic and foreign institutional investors' behavior in China
www.tandfonline.com [PDF]
… the Chinese authorities decided at the end of 2002 to allow selected Qualified Foreign Institutional Investor (QFII) to … At the end of 2007, the State Administration of Foreign Exchange announced that the … With the increase in total quota, approval of qualifications for QFII by China …

The Qualified Foreign Institutional Investor System and Corporate Governance in ChinaThe Qualified Foreign Institutional Investor System and Corporate Governance in China
link.springer.com [PDF]
… the Chinese authorities decided at the end of 2002 to allow selected Qualified Foreign Institutional Investor (QFII) to … At the end of 2007, the State Administration of Foreign Exchange announced that the … With the increase in total quota, approval of qualifications for QFII by China …

The influence of qualified foreign institutional investors on the association between default risk and audit opinions: Evidence from the Chinese stock marketThe influence of qualified foreign institutional investors on the association between default risk and audit opinions: Evidence from the Chinese stock market
onlinelibrary.wiley.com [PDF]
… the Chinese authorities decided at the end of 2002 to allow selected Qualified Foreign Institutional Investor (QFII) to … At the end of 2007, the State Administration of Foreign Exchange announced that the … With the increase in total quota, approval of qualifications for QFII by China …

Auditor choice and institutional investor characteristics after the Enron scandal in the French contextAuditor choice and institutional investor characteristics after the Enron scandal in the French context
www.inderscienceonline.com [PDF]
… the Chinese authorities decided at the end of 2002 to allow selected Qualified Foreign Institutional Investor (QFII) to … At the end of 2007, the State Administration of Foreign Exchange announced that the … With the increase in total quota, approval of qualifications for QFII by China …

Qualified Foreign Institutional Investor Shareholdings and Corporate Operating PerformanceQualified Foreign Institutional Investor Shareholdings and Corporate Operating Performance
www.utpjournals.press [PDF]
… the Chinese authorities decided at the end of 2002 to allow selected Qualified Foreign Institutional Investor (QFII) to … At the end of 2007, the State Administration of Foreign Exchange announced that the … With the increase in total quota, approval of qualifications for QFII by China …



Q&A About Qualified Foreign Institutional Investor – QFII


Are there any restrictions on how long an investor may remain part of this investment opportunity?

Yes, there is a maximum period that an individual or company may hold these licenses; however it has not been specified what that time frame will be yet.

What are two types of investment programs available for foreign investors?

Two types include Qualified Foreign Investment Quota and Registered Foreign Institutional Investors RFIIs .

Who can participate in the QFII program?

Licensed international investors are permitted to participate in China's mainland stock exchanges.

How much was increased from April 2012 to April 2013?

From 3 billion to 8 billion was increased from April 2012 to April 2013.

Why did they increase it from 3billion to 8billion?

They increased it because they want more people investing into China's stock market so that China can become more powerful economically than before

What is the QFII program?

The Qualified Foreign Institutional Investor program was launched by the People's Republic of China in 22 to allow foreign investors access to its stock exchanges in Shanghai and Shenzhen.

How much money does a licensed investor have access to invest through the QFII program?

A combined quota for the Qualified Foreign Institutional Investor program was set at U.S. 8 billion as of April, 212.

How much is currently allocated under these programs?

Currently there is an allocation of 2.7 billion under QFII program and US3 billion under RQFIIs program.

Who holds the greatest single share of quota?

UBS AG holds the greatest single share of quota at 4 million.

What types of investments are available through the QFII program?

Investments include listed stocks (excluding foreign-oriented, or "B" shares); Treasury bonds, corporate debentures and convertible bonds, and other financial instruments approved by the China Securities Regulatory Commission (CSRC).

What is meant by "yuan-denominated 'A' shares"?

Yuan-denominated "A" shares refer to Chinese domestic stocks traded on either Shanghai or Shenzhen Stock Exchanges which trade under

What qualifications must be met before an investor can become a licensed participant of the QFII Program?

Certain qualifications must be met (qualifications are dependent upon type of investor - such as fund management companies and insurance companies). For example, fund management companies are required to have a minimum of five years experience in assets management and must have managed at least U.S.$5 billion in securities assets during their most recent accounting year.

Leave a Reply

Your email address will not be published. Required fields are marked *