The new Qualified Foreign Institutional Investor (“QFII”) regime came into effect on 1st November 2020. The 18-year-old China capital market access scheme now has a quite different appearance that deserves attention from global investors.
What are the most significant changes in the regulation? Depending on what kind of investor/manager you are, the answer may vary. But three aspects are very noticeable:
- by lowering and simplifying the QFII qualification requirements, the new regulation enables smaller investors/managers to access the market;
- by substantially increasing the QFII investment scope, the new regulation enables global investors/managers to carry out new investment strategies in the China market. Such investment scope breakthroughs include financial and commodity futures, bond repo, the technology third-board (NEEQ), ABS, IPO participation, etc;
- by including both private funds and public funds in the QFII investment scope, the regulation enables global investors to tap into local management capabilities.
To help global investors to better leverage the facilities offered by the new QFII regime, we conducted a further interview with Eugenie Shen, Managing Director and Head of Asset Management Group, Asia Securities Industry & Financial Markets Association (ASIFMA), and Melody Yang, Partner of Simmons & Simmons Law Firm, both of whom have abundant first-hand experience working with Chinese regulators and global investors. They gave a detailed review of some of the key aspects of the new regulation.