Jersey Finance comments on positive moves towards liberalisation in China’s financial market.

Jersey Finance has welcomed as a “step in the right direction” an announcement from China’s currency regulator last Tuesday (10 September) in which it said it would cancel investment quotas under the Qualified Foreign Institutional Investors (‘QFII’) and Renminbi Qualified Foreign Institutional Investors (‘RQFII’) programs.

Commenting on the move, Richard Nunn, Regional Head of Eastern Markets at Jersey Finance, said:

“The QFII and RQFII programs allowed overseas institutional investors to move a restricted amount of money into China’s capital account for investment. These restrictions are now completely abolished after being in place for more than two decades, and there’s no doubt that this represents a major step by the State Administration of Foreign Exchange (‘SAFE’) to deepen the reform and opening up of China’s financial market.

“The investment demand of foreign investors in China’s financial market has been on the rise, with China’s stocks and bonds being included increasingly in main international indexes, such as MSCI, FTSE Russell, S&P Dow Jones and Bloomberg-Barclays index, and the weights being steadily increased.

“Despite the ending of QFII and RQFII quotas, SAFE made no moves last week to ease restrictions on outbound investments yet, but this policy change heralds a new round of financial liberalization. This is a step in the right direction, as it may only be a matter of time before the outbound investment restrictions will also be relaxed.”