Fidelity Investments Management (Hong Kong) got an additional $800 million in quotas for investment in China's capital markets Thursday, lifting its total quota under that country's qualified foreign institutional investor program to $1.2 billion.
Fidelity becomes the first asset management company with a QFII quota of more than $1 billion, noted Mark Talbot, Hong Kong-based managing director, Asia-Pacific ex-Japan, with Fidelity Worldwide Investment, in a statement. Mr. Talbot couldn't immediately be reached for further comment.
Analysts called the award yet another sign that Chinese officials are eager to see MSCI include a sliver of the country's A-shares market in the company's emerging markets indexes when the results of its annual review are announced this June.
In a telephone interview, Chia Chin Ping, a Hong Kong-based managing director of MSCI's research efforts in the Asia-Pacific region, welcomed the continued signs of flexibility, while noting the critical importance that quotas be tied to underlying demand rather than being constrained by arbitrary limits.
The Fidelity news, revealed when China's State Administration of Foreign Exchange posted the latest monthly quota data on its website Thursday, effectively eliminates the $1 billion barrier for money managers that has persisted since the QFII program’s launch more than a decade ago, noted Charles Salvador, director, investment solutions with Z-Ben Advisors, a Shanghai-based consultancy on financial market business opportunities in China.
The size of the increment, at $200 million to $300 million more than any previous single allocation given to a money manager, is likewise significant, said Mr. Salvador.
The move is yet another sign that China's regulators are moving quickly to liberalize access to the country's capital markets, while minimizing the differences between QFII and China's renminbi qualified institutional investor program, which has offered greater flexibility to money managers seeking quota capacity thus far, he said.
The QFII program so far has provided more generous quotas to asset owners, including central banks and sovereign wealth funds, than to money managers.
The only asset owner among the seven recipients that got a combined $2.62 billion in new capacity in March was Kuala Lumpur-based Khazanah Nasional Berhad, a Malaysian sovereign wealth fund. Khazanah saw its quota double to $500 million.
The latest awards lifted the combined quotas since the QFII program's launch to $72.2 billion, just under half the program's $150 billion limit.
Mr. Salvador said it’s not out of the question that an accelerating pace of quota awards could see that ceiling reached this year. If that were to happen, China's regulators would be likely to raise the limit or might even eliminate the ceiling altogether, he predicted.
