QFII quota tipped to make up 10 pc of Chinese market

Investment quota under the QFII scheme will jump to 10 per cent of the mainland market's capitalisation in five years from 1.5 per cent now, says ChinaQFII, a Hong Kong firm that helps foreigners invest on the mainland.

Over the same period, the number of qualified foreign institutional investors would more than double to over 500 from 240, said William Kwok, the chief executive of ChinaQFII.

He expects the number of investors under the renminbi qualified foreign institutional investor (RQFII) scheme also will more than double, to more than 100 from 47.

The central government launched the RQFII scheme in December 2011, when it granted licences to 21 subsidiaries of mainland securities firms and fund houses to sell yuan fund products in Hong Kong that would invest in mainland-listed stocks and bonds.

The QFII scheme, introduced in 2002, allows investors to bring foreign currency into the mainland to buy stocks, bonds and money-market instruments.

The number of QFIIs soared almost 20 times from 12 in 2003 to 237 in August, according to , a book released by ChinaQFII yesterday. The approved investment quota for QFII leapt from US$1.7 billion in 2003 to US$46.4 billion in August, the book says.

The financial industry is the favourite mainland sector for foreign investors, with 30 per cent of those in the QFII scheme naming it as a top three pick, ChinaQFII's survey of about 200 investors shows.