Chinese funds receive go signal to invest abroad

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.

More via WSJ.


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