China could raise the current investment quotas for its Qualified Foreign Institutional Investor (QFII) and Renminbi Foreign Institutional Investor (RQFII) schemes by nine or 10 times, Guo Shuqing, chairman of China Securities Regulatory Commission (CSRC), said Monday at the Asia Financial Forum in Hong Kong.
The government is considering further expanding the schemes to allow all of the institutional investors who meet qualification requirements to take part in the programs, Guo explained.
Since first launched in December 2011, China has already twice lifted the quota for the RQFII scheme, which allows yuan funds raised in Hong Kong to be invested in the mainland securities market, with the current ceiling on the program now set at 270 billion yuan ($43.42 billion).
Meanwhile, the QFII quota was widened to $80 billion in April 2012, up from $30 billion. Guo had also said in November that the upper limit on the QFII scheme would be lifted further if the $80 billion mark was reached.
As of December 31, 2012, regulators have granted a total investment quota of $37.44 billion to 169 institutional investors under the QFII plan, statistics from the State Administration of Foreign Exchange (SAFE) show, with some 35 percent of the current quota amount going to institutions in 2012.
As for the RQFII scheme, 24 institutions - including 12 fund companies and 12 securities firms - held a combined quota of 67 billion yuan at the end of last year, according to the SAFE.
The QFII and RQFII programs have expanded quickly as the government eases capital controls in order to draw more money into the sagging mainland equity market and meet the fundraising demands of the hundreds of companies currently waiting in line for a public float, Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, told the Global Times.
"Also, the stable yuan exchange rate makes it possible for regulators to expand the QFII program, a move which might otherwise put pressure on the yuan to appreciate," Zhou said.
The Chinese government is also considering allowing individual investors to take part in schemes aimed at managing cross-border capital flow - such as the Qualified Domestic Individual Investor (QDII2) and the Renminbi Qualified Foreign Individual Investor (RQFII2) plans - Guo went on to mention, without offering further details.