Global demand for once sought-after quota to buy Chinese securities has fallen for the first time in the scheme’s decade-long history, even as Beijing, eager to support its currency and equity prices, signals it will offer bigger allocations.
An arm of Kuwait’s sovereign wealth fund and some international fund managers are among those Beijing is encouraging to apply for new or more generous quotas as part of the country’s multipronged efforts to stem capital flight and attract offsetting inflows.
But the latest data from the State Administration of Foreign Exchange, which grants quotas under the so-called Qualified Foreign Institutional Investor scheme, shows the challenge it faces at a time of deep ambivalence towards the country’s volatile stock market and currency. In January the total quota allotted to foreign funds dropped to $81.068bn, down $30m on a month earlier.