China’s biggest mutual funds are nearing government limits on offshore investment, as they seek higher returns elsewhere against a backdrop of slower growth at home, reports the Financial Times. China’s so-called Qualified Domestic Institutional Investor scheme, introduced in 2006, allows banks, brokerages and asset managers to bypass the country’s strict capital controls and buy securities abroad.
Beijing has steadily increased the total quota from $87bn a decade ago to its current level of $166 billion across 184 institutions but has only made small additions since late 2021. While no official data is provided on the use of the quota, several investors and legal representatives across the asset management industry said rising appetite for overseas-targeted funds was pressuring individual allowances.
An analysis of public fund data shows fund management companies Guangfa, E Fund and China Asset Management are close to the limits published by the State Administration of Foreign Exchange, which administers the scheme.