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UPDATED: February 6, 2012 NO. 6 FEBRUARY 9, 2012
A Step Further to a Global Yuan
China allows yuan funds in Hong Kong to invest in mainland securities market
By Lan Xinzhen
Share

The RQFII is also good news for the mainland's A share market as it will bring in more capital. Last year, the mainland stock market plunged and has affected the launch of new IPOs. The RQFII is just in time to rescue the deteriorating A share market.

But in the short term, the RQFII will have little influence on the mainland stock market, as the majority of RQFIIs can only be invested in fixed-income products, and no more than 4 billion yuan ($610.69 million) can be invested in stocks and equity funds, which is small compared with the 16-trillion-yuan ($2.44-trillion) market value of the A share market.

Future expansion

Hong Kong's yuan assets are more than willing to enter the mainland market because the deposit interest rate of the yuan in Hong Kong is much lower than that of the mainland, and the investment channel is very limited.

But the first approved RQFII quota is only equivalent to 3 percent of the yuan deposits in Hong Kong.

Figures from the Hong Kong Monetary Authority showed that by the end of November 2011 the yuan deposits in Hong Kong exceeded 620 billion yuan ($94.66 billion).

On January 16 at the Asian Financial Forum held in Hong Kong, Yao Gang, Vice Chairman of CSRC, said the CSRC is considering expanding the quotas.

It's reported that the CSRC may be increasing the quota by another 50 billion yuan ($7.63 billion), which will be managed separately from the 20-billion-yuan quota.

Li said considering the amount of yuan funds in Hong Kong, RQFII has a huge market in the future and might exert a real effect on the mainland securities market.

RQFIIs and Quotas

The State Administration of Foreign Exchange disclosed that nine fund management companies and 12 securities companies shared the preliminary 20-billion-yuan ($3.05 billion) quota approved in the pilot program of RQFII.

- Fund management companies include:

China Asset Management (Hong Kong) Ltd.: 1.2 billion yuan ($188.98 million)

CSOP Asset Management Ltd.: 1.1 billion yuan ($173.23 million)

Harvest Global Investments Ltd.: 1.1 billion yuan

Da Cheng International Asset Management Co. Ltd.: 1.1 billion yuan

China Universal Asset Management (Hong Kong) Co. Ltd.: 1.1 billion yuan

Bosera Asset Management (International) Co. Ltd.: 1.1 billion yuan

HFT Investment Management (HK) Ltd.: 1.1 billion yuan

HuaAn Asset Management (Hong Kong) Ltd.: 1.1 billion yuan

E Fund Management (Hong Kong) Ltd.: 1.1 billion yuan

- Securities companies include:

Shenyin Wanguo (H.K.) Ltd.: 900 million yuan ($141.73 million)

Essence International Financial Holdings Ltd.: 900 million yuan

China International Capital Corp. (Hong Kong) Ltd.: 900 million yuan

Guosen Securities (Hong Kong) Financial Holdings Co. Ltd.: 900 million yuan

Everbright Securities Financial Holding Co. Ltd.: 900 million yuan

Guotai Junan International Holdings Ltd.: 900 million yuan

Haitong International Holdings Ltd.: 900 million yuan

GF Holdings (Hong Kong) Corp. Ltd.: 900 million yuan

China Merchants Securities (International) Co. Ltd.: 900 million yuan

CITIC Securities International Co. Ltd.: 900 million yuan

Huatai Financial Holdings (Hong Kong) Ltd.: 500 million yuan ($78.74 million)

Guoyuan Securities (HK) Co. Ltd.: 500 million yuan

Email us at: lanxinzhen@bjreview.com

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