Stock Connect, CIBM seen replacing QFII and RQFII for newer China investments

Research from Standard Chartered has pointed to an ongoing shift in the way investors access the Chinese market and Chinese assets, which is expected to see the Stock Connect and China Interbank Bond Market (CIBM) channels take over business from the QFII and RQFII channels.

Although the Qualified Foreign Institutional Investor and RMB Qualified Foreign Institutional Investor channels remain popular – the results of a survey of some 900 investors globally, and which was carried out in March-April 2017, suggest – there is a noticeable trend.

“As the pool of foreign investors in China grows, it is likely these newer allocators will increasingly use Stock Connect and CIBM at the expense of QFII and RQFII. Just 1.9% of all respondents confirmed they would look at QFII as an access channel moving forward, highlighting the fact that these mechanisms have now been surpassed in qualitative terms. This is further underlined as QFII and RQFII levels are operating below full capacity, with 50% of quotas on average being used by foreign investors,” the report states.

And while there may be little evidence of direct cannibalising of the QFII and RQFII channels by the Stock Connect and CIBM business, it is still seen as a trend for newer investors in the market to use the latter rather than the former, the research suggests.

Still, allocations via QFII and RQFII grew over the past year, and are being taken up by managers, including the world’s biggest manager by AUM, BlackRock.

Click here to read the full research report: RMB-Internationalisation-in-2017-Change-alignment-and-maturity



Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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