Chinese funds relax restrictions amid market rout

Chinese investment funds have begun easing subscription restrictions after a recent global market sell-off wiped out trillions of dollars in value.

At least five funds operating under the Qualified Domestic Institutional Investor (QDII) programme have announced increased investment limits or reopened to new investors.

Hwabao WP Fund Management’s Nasdaq Selected Equity fund has increased the daily maximum purchase limit per account to 100,000 yuan from 20,000 yuan.

Likewise, a product from JPMorgan Asset Management, focusing on offshore mutual funds, raised its daily investment cap to 50,000 yuan from 10,000 yuan.

These moves come as investors have shifted their attention to foreign assets amid a lack of fund shares in the domestic struggling stock markets in the first half of the year.

Chinese investors have been pouring money into QDII funds in recent years, leading to the popularity of funds like exchange-traded funds (ETFs) tracking the Nikkei 225 Index and Nasdaq.

To manage the overwhelming demand and nearing quota limits, these funds have issued risk warnings and restricted subscriptions.

The QDII scheme is a significant outbound investment channel that enables Chinese investors to purchase overseas securities within Beijing’s stringent capital controls.

 It is subject to a quota determined by China’s State Administration of Foreign Exchange (SAFE).

Attribution: Reuters