(China Alert) Cross-border: Mega R/QFII quotas expected
- QFII, RQFII
·More firms are being granted larger R/QFII quotas and IBB licenses
·Top-line cross-border access will increase and quota will be notional
·Global managers will have more freedom and optionality
Update: Z-Ben Advisors has observed that firm-level access to the China market is being granted in a greater magnitude. We believe this shows that regulators are focusing on a long term horizon for cross-border harmonization which goes beyond top-line access. Regulators are staying the course, pushing forward with their reform agenda and reconciling the effects of recent volatility, and it will take some reconciling. This is the beginning of notional quota: the result of all of this is that utilization at the firm level isn’t as important as before. Regulators are giving global managers more control and freedom over their China access, which will be essential to successful long term strategies that allow for periods of volatility.
The firms that matter are getting quota, and lots more of it. BlackRock AM became the second biggest asset manager in the QFII program, being granted USD400m in August, bringing its total QFII quota to USD1bn. Fidelity remains on top with USD1.2bn quota. Over the past few months, BlackRock has been aggressively ……
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