Kuwait’s China investment quota boosted to $1 billion KIA one of 6 QFIIs granted highest cap

BEIJING, Jan 20, (KUNA): China’s foreign exchange regulator awarded Kuwait Investment Authority (KIA) fresh quota of $700 million this week for direct investment in the Chinese securities market, on top of the $300 million already granted last year, it was announced Sunday.

With the additional quota awarded by the State Administration of Foreign Exchange (SAFE), KIA’s investment quota has reached $one billion cap that a qualified foreign institutional investor (QFII) can obtain in China.

Kuwait’s sovereign wealth fund is one of only six QFIIs that have been granted the highest $1 billion quota. Other five institutions are Qatar Holding, Hong Kong Monetary Authority, Norway’s Norges Bank, Government of Singapore Investment Corp. and the Singapore-based Temasek Fullerton, according to the SAFE. Under the new regulation issued by China’s securities regulator late December, only sovereign wealth funds are entitled to receive a quota above $one billion.

KIA has earlier told Kuwait News Agency (KUNA) that it received the initial investment quota of $300 million last March after winning a QFII license in December 2011, following the inauguration of its Beijing Representative Office in October in that year. China launched the QFII program in 2002 to allow qualified overseas funds to buy and sell yuan-denominated A-graded shares within the SAFE-set quota. As of December 31, the authorities had granted QFII status to 207 foreign institutions, with 169 QFII license holders given a combined investment quota of $37.44 billion.

Speaking at the Asia Financial Forum in Hong Kong on Jan 14, China Securities Regulatory Commission Chairman Guo Shuqing said China can increase 10 times the current level of foreign investment that now only accounts for about 1.5 percent of the country’s A-share market. Guo also said China will further increase the total quota for QFII investors, which at present stands at $80 billion.
KIA, which manages Kuwait’s oil generated-assets, said in October that the fund’s investment in Greater China including Hong Kong has grown nearly eight times to $15 billion since its entry into the Hong Kong market in 2000, with setting its sights on hitting $20 billion this year. For mainland China alone, the figure has jumped to $8 billion from zero in the past six years.

In another development, KIA Managing Director Bader Al-Saad told KUNA in October that the fund was also granted a CNY 6.5 billion ($1 billion) license by China’s central bank last year to invest in the domestic interbank bond market. The People’s Bank of China launched a program in August 2010 to allow selected foreign financial institutions and central banks to buy bonds on China’s interbank market under a preset quota, in a move aimed at promoting the internationalization of Chinese currency.

Across Asia, KIA has so far participated as a cornerstone investor in Industrial and Commercial Bank of China, Agricultural Bank of China, AIA, CITIC Securities and the region’s biggest hospital operator IHH Healthcare of Malaysia. Cornerstone investors are a handful of elite institutional investors who are guaranteed shares early in initial public offerings (IPOs) in exchange for a pledge to hold the stocks for a period.

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