China's capital markets have entered a period of dramatic liberalization, enabling asset managers to offer investors new products with exposure to this once elusive market.

Regulators have relaxed certain market restrictions, including but not limited to:

  • The Qualified Foreign Institutional Investor (QFII) investment quota ceiling was increased to $150 billion from $80 billion in December 2013.1
  • The Renminbi Qualified Foreign Institutional Investor (RQFII) quota allocation that was previously granted to each individual fund is now granted to the manager and allows quota to be shared across multiple funds.
  • Reports suggest that China Interbank Bond Market (CIBM) restrictions on foreign investors will also soon be relaxed in terms of eligibility, scope of investment, and quota management.
  • The Shenzhen-Hong Kong Stock Connect is expected to launch as early as fourth quarter 2015 following the implementation of the Shanghai-Hong Kong Stock Connect platform in November 2014. Both facilities provide investors greater access to investment in mainland China without impacting their quotas.
  • The RQFII ETF space is rapidly evolving and Brown Brothers Harriman (BBH) has created this edition of Exchange Thoughts in order to help you understand recent developments in the space, as well as the background and context of these products. Read full English publication here.

1China Securities Regulatory Commission, QFII Quota Raised to USD 150 billion and RQFII Pilot Expanded in Singapore and London, 12 July 2013