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Singapore’s RQFII China quota to be doubled to S$22.4b

SINGAPORE — The Republic has further strengthened its position as a leading offshore yuan centre, with the central bank saying yesterday that the Renminbi Qualified Foreign Institutional Investor (RQFII) quota for investment in Chinese financial markets will be doubled.

SINGAPORE — The Republic has further strengthened its position as a leading offshore yuan centre, with the central bank saying yesterday that the Renminbi Qualified Foreign Institutional Investor (RQFII) quota for investment in Chinese financial markets will be doubled.

The Monetary Authority of Singapore (MAS) said the city-state’s quota under the RQFII scheme would be increased to 100 billion yuan (S$22.4 billion) from 50 billion yuan previously. The RQFII programme is the yuan-denominated version of the Qualified Foreign Institutional Investor scheme, which was created by China to allow foreigners to invest in Chinese capital markets.

“This is in response to the strong interest by Singapore-based asset managers and investors to invest in China. This larger quota will allow more fund managers in Singapore to offer investors a wider range of RMB fund products. It will also help bring greater liquidity to China’s capital markets and help to broaden their investor base,” the MAS said in a statement. RMB is the official name of the Chinese currency, which is also referred to as the yuan.

HSBC Singapore CEO Guy Harvey-Samuel said: “As of June, Singapore has the highest RQFII quota utilisation rate in the region outside of Hong Kong, reinforcing its role as a financial conduit for regional investors to participate in the China market.

“The interest for RQFII quota in Singapore has emerged from a variety of asset managers, including those operated by insurance companies and even from exchange-traded funds wanting to get direct access into China.”

The MAS statement came just after a state visit by Chinese President Xi Jinping to Singapore last week to mark 25 years of formal diplomatic relations between the countries. Mr Xi announced on Friday a third urban mega project between China and Singapore, to be launched in the western Chinese city of Chongqing.

China and Singapore have agreed to extend to Chongqing the same cross-border RMB initiatives that currently exist with respect to Suzhou and Tianjin, the MAS said yesterday. This means, for example, that Singapore-based banks will be allowed to lend RMB to companies in Chongqing, and Chongqing-based companies may issue RMB bonds in Singapore and fully repatriate the proceeds.

Mr Goh Beng Kim, head of transaction banking at Standard Chartered Singapore, said: “The extension of the RMB cross-border scheme to Chongqing is a major step forward. Given the municipality’s importance to the One Belt, One Road strategy, we expect to see strong demand in financing, including offshore loans.”

The MAS and the People’s Bank of China also agreed to renew and enhance the Bilateral Currency Swap Arrangement (BCSA) established between the two central banks.

By providing timely liquidity support to market participants, a stronger BCSA will help anchor market confidence as Singapore’s RMB market continues to grow, the MAS said.

A new dimension in the financial cooperation agenda between Singapore and China has been the agreement to enhance capital market cooperation, the MAS said, pointing to two specific initiatives that will help set off this process.

First, MAS and the China Securities Regulatory Commission (CSRC) have agreed to institute a regular high-level dialogue that will help the two regulators exchange views and come to a common understanding on regulatory issues that impinge on their respective capital markets.

Secondly, the MAS and CSRC have agreed to explore product collaboration to broaden their capital market offerings.

With greater capital market connectivity, Singapore will be well-placed to support the needs of Chinese policy banks, corporates and investors under China’s One Belt, One Road initiative, the MAS said. AGENCIES

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