China awards Gates Foundation, Bank of Lithuania $100 million each in QFII quota

Melinda and Bill Gates
Melinda and Bill Gates

Bill & Melinda Gates Foundation and Lithuania’s central bank were awarded quotas by Chinese regulators to invest $100 million apiece in China’s domestic equity and fixed-income markets.

A Feb. 28 update on the website of China’s State Administration of Foreign Exchange showed the two institutional investors garnered $200 million out of $900 million in quotas approved by SAFE on Feb. 25 under the country’s Qualified Foreign Institutional Investor program.

It was the third quota award over the past decade for the $40.2 billion Bill & Melinda Gates Foundation, Seattle, bringing its combined allotment to $400 million.

It was the Bank of Lithuania’s first quota award.

Among other quota recipients, Fubon Securities Investment Trust Co. got the biggest chunk of new capacity approved by SAFE in late February at $200 million.

Four money management firms — Goldman Sachs Asset Management International, Fidelity Funds (Hong Kong) Ltd., Russell Investments Ireland Ltd. and Samsung Asset Management Co. – were awarded quotas of $100 million apiece.

Meanwhile, Pictet Asset Management Company and China Trust Commercial Bank received $50 million apiece.

In February, the portion of quotas snared by institutional investors, at just more than 20%, was one of the lowest over the past half year, according to data compiled by Z-Ben Advisors, a Shanghai-based consultant on investment management business opportunities in China.

Z-Ben has predicted Chinese regulators could look to focus QFII quotas increasingly on institutional asset owners, capable of giving local markets a less speculative tone.

Jesse Lazarus, a research analyst with Z-Ben, said there are signs that some institutional investors are showing more interest now in obtaining quotas under the renminbi qualified foreign institutional investor program launched at the end of 2011, which come with fewer investment restrictions than QFII quotas do.

Still, Mr. Lazarus noted, regulators have thus far extended RQFII quotas to money managers, not asset owners.

It’s not out of the question they could choose to do so, but they could also move to loosen restrictions on QFII quotas, which would serve to further boost institutional interest in the older program, he said.

As of late February, 237 QFII license holders had garnered combined quotas of $52.3 billion since the QFII program was launched 12 years ago.