Chinese Investors Allowed to Invest in Overseas Equities and Mutual Funds under QDII Scheme 

June, 2007 - Taylor Hui

On 10 May 2007, the China Banking Regulatory Commission (CBRC) issued its "Notice on the Adjustments to the Overseas Investment Scope of Overseas Wealth Management Business of Commercial Banks on behalf of their Clients". This Notice widens the investment scope permitted under the Qualified Domestic Institutional Investors scheme (QDII) applicable to commercial banks (including Chinese banks and approved foreign banks in China). When the QDII scheme was announced a year ago, the QDII investment products (which accept Renminbi denominated subscriptions from local Chinese investors and convert them into foreign currencies before investing offshore) offered by onshore banks were limited in exposure to bonds and fixed income instruments. Commercial banks are required to apply for QDII investment quotas before issuing QDII products. It is reported that about US$14 billion in investment quotas have been granted to date.

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