China transition boosts sovereign demand for QFII quotas

Sovereign wealth funds are embracing qualified foreign institutional investor (QFII) quotas as the Chinese Communist Party Congress unveils its

new leaders, say fund managers.

“The last one to two months have seen a dramatic change in interest from the sovereign wealth funds,” says Juwan Lee, head of investments at HuaAn Funds, who spoke at the Mena Investment Management Forum in Doha, Qatar.

Every significant sovereign wealth fund now either has a QFII licence or is looking to get one, he says. QFII licences allow large institutional investors to buy A shares on Chinese mainland stock exchanges that were previously off limits to foreign investors.

Many sovereign wealth funds have responded to the Chinese authorities increasing the QFII quota from $30 billion (€24 billion) to $80 billion in April by increasing their allocations.

The election of a new central committee of the Chinese Communist Party has helped to soothe investors’ concerns about political change in the country. The uncertainty is not over, but the transition is underway and the country can move forward, says Lee.

©2012 funds europe

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