Malaysia's central bank joins exclusive QFII club

Malaysia’s central bank has become the seventh asset owner to receive a total of $1.5 billion in qualified foreign institutional investor (QFII) quota in the latest round of handouts.

The State Administration of Foreign Exchange (Safe), China’s currency regulator, yesterday dished out a fresh round of quotas that allow foreign investors direct access to the country’s onshore securities market.

Bank Negara Malaysia received QFII quota of $500 million, its third award. It obtained its first QFII quota of $200 million in September 2009. The bank has since received two additional quotas, of $200 million and $600 million, respectively, taking its total to $1 billion in July last year.

The six other institutions to have reached $1.5 billion are the Hong Kong Monetary Authority, Kuwait Investment Authority, Norges Bank Investment Management, Temasek Fullerton Alpha Investments, GIC and the Abu Dhabi Investment Authority.

Safe removed a $1 billion cap on QFII quotas for central banks and sovereign funds in December 2012 as it moved to prioritise long-term institutional investors.

Middle Eastern state fund Qatar Holding, whose quota is $1 billion, is among those next in line to join the $1.5 billion club at some stage in the near future.

Other QFII quota recipients in this latest round included Yuanta Securities Investment Trust, E Fund Management (Hong Kong) and Société Générale, which each received an additional $200 million.

CDH Investment Advisory obtained an additional $150 million and Value Partners Hong Kong $100 million, according to an announcement on Safe’s website.

Timothy Tse, chief executive of Value Partners, said his firm’s fresh quota would be deployed into existing funds, including an actively managed QFII equity fund that targets institutional investors, and other mutual funds in Hong Kong. The firm has six mutual funds with exposure to Chinese securities.

“We are still discussing the matter with clients, and then we will decide the amounts we will deploy into the different funds,” said Tse, adding that Chinese equity market sentiment had recently improved, leading to inflows from institutional investors.

Value Partners received its first QFII quota, $100 million, in December 2012. Of that, $50 million has been allocated to the firm’s actively managed QFII fund.

By this April, the firm’s RQFII quota was Rmb1.3 billion ($210 million), which it plans to use for a new actively managed equity fund.

On the renminbi-denominated QFII side, CSOP received quota of Rmb2 billion, taking its total to Rmb44.6 billion ($7.2 billion). 

Meanwhile, Fullgoal Fund Management (Hong Kong), Essence International, Taikang Asset Management (Hong Kong), ABCI Asset Management and Guoyuan Securities (Hong Kong) each received Rmb1 billionin RQFII, while Enhanced Investment Products received Rmb300 million.

As of this month, Safe had awarded Rmb257.6 billion inquota to 72 RQFII licence holders and $57.9 billion to 252 licence holders.