Quota in QFII to triple to US$30b

CHINA will triple the amount of money overseas institutions can invest in yuan-denominated stocks and bonds to further open mainland markets.

The investment quota under the so-called qualified foreign institutional investor program, or QFII, will increase to US$30 billion, the State Administration of Foreign Exchange said in a statement on its Website yesterday, without giving a timeframe for the change.

Expanding the program from the current US$10 billion quota is aimed at diversifying the stock market's investor base and reducing volatility, Bloomberg News said.

China's benchmark CSI 300 Index has more than doubled this year, prompting the government to induce measures to cool the rally.

"The QFII program has helped to change investor behavior and advanced the implementation of risk-management measures in the country's capital markets," the statement said.

Forty-nine overseas investors now own nearly 200 billion yuan (US$27 billion) in Chinese securities because of the program, which started in 2002, the statement said.

The announcement follows through on a financial services pact signed between China and the United States in May and comes before top economic officials from both countries are scheduled to meet in China on Wednesday and Thursday.

China also plans to enlarge the scope of its qualified domestic institutional investor, or QDII, program to allow Chinese brokerages to improve risk management and offer more financial products, the statement said.