Easier access to A-share market for foreign investors

A representative of China’s State Administration of Foreign Exchange (SAFE) indicated yesterday, at a forum, that SAFE would loosen rules governing the Qualified Foreign Institutional Investor (QFII) program allowing foreign institutions to buy domestic A-shares. Such a move would help to bolster the A-share market, which has been one of the world’s worst performing markets since the sub-prime crisis hit.

SAFE would likely be more flexible in increasing quotas for the QFII program if there was demand and rules governing lock-up periods would likely be relaxed, allowing QFII participants to withdraw money more easily. Previously, China has indicated it would expand the QFII program quota to US$30 billion, in total, but now some believe the quota could grow to US$50 billion.