More evidence of the strength of the Chinese has emerged today after the State Administration of Foreign Exchange has allowed two Chinese mutual funds to allocated a part of their money in international securities. Qualifying under the country’s Qualified Domestic Institutional Investors program, E Fund Management Co and China Merchants Fund received a go signal to invest a total of $1.5bn abroad.
“This is the outcome of a marked shift in China’s policy,” Peter Alexander, principal of research firm Z-Ben Advisors, said. “The country is getting more aggressive in allocating money overseas to diversify its massive amount of foreign-exchange reserves.”
He estimates that as many as 16 other domestic mutual funds are lining up for SAFE’s QDII quota approval.
The reopening of the QDII quota-granting process came after SAFE said this month that China plans to expand the scale of outward investments under the QDII program as part of the country’s capital account reform.
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