The Hong Kong Monetary Authority (HKMA) has been permitted to invest in renminbi-denominated stocks and bonds via the Qualified Foreign Institutional Investor (QFII) scheme, Bloomberg reported. HKMA was included in the scheme in October, the China Securities Regulatory Commission said in a statement on its website. It gave no details as to how much the HKMA will be allowed to invest. Inclusion in the QFII program effectively gives Hong Kong the ability to further diversify its US$266 billion in foreign exchange reserves. It would also need to build up its holdings of Chinese assets should the Hong Kong dollar peg to the US dollar be replaced by a link to the renminbi in coming years. Frances Cheung, a Hong Kong-based senior strategist at Credit Agricole (ACA.Euronext), said HKMA would likely target mainly government bonds. Cheung expects renminbi assets to account for 5-10% of HKMA’s portfolio in six months’ time.