Korean central bank shifts reserves to China

South Korea’s central bank has applied to buy renminbi-denominated assets in China under the qualified foreign institutional investor (QRII) program, paving the way for further investment in the mainland, the Financial Times reports. The QFII program currently allows around 100 overseas investment groups to buy equities and bonds on the mainland, including central banks in Norway, Hong Kong and Malaysia, and Mirae Asset Securities and nine other Korean institutional investors. The Bank of Korea plans to invest around US$200-300 million of foreign exchange reserves in Chinese securities if the license is approved. The bank said the total would not be large enough to significantly diversify South Korea’s foreign exchange holdings, which grew by US$8.6 billion in April to US$307 billion, but it would pave the way for further investment in China. Quotas under the QFII program are limited in size, and currently total about US$21 billion.