Six foreign hedge fund management companies have been granted permission by Shanghai to raise Yuan funds in China and invest it abroad, the 21st Century Business Herald reported.
The move opens up the world’s second-largest economy for the first time to the US$2 trillion-plus global hedge fund industry, potentially helping foreign funds raise billions of dollars from Chinese institutional investors for investment abroad.
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The move is likely to direct a capital outflow worth a combined US$3 billion, the publication reported citing an unidentified source with knowledge of the decision.
According to the report the groups are Man Group, Winton Capital Management, Oak Tree, Citadel, Och-Ziff Capital Management Group and Canyon Partners.
The city, which is aiming to transform itself into a global financial centre by 2020, officially embarked on a long-awaited qualified domestic limited partner (QDLP) scheme after obtaining approval from state regulators.
The qualified foreign institutional investor (QFII) and the renminbi qualified foreign institutional investor (RQFII) programmes give quotas for foreign institutions to invest in China’s markets, while the qualified domestic institutional investor (QDII) scheme gives local institutions quotas to invest outside of China in equities and fixed income products.
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By GlobalDataThe State Administration of Foreign Exchange set an initial total US$5 billion quota for the Shanghai QDLP pilot programme and it is believed the city hopes to see this quota increased.
The overall quota for a program allowing foreign institutions to invest in China’s markets was recently raised to US$150 billion, up from the previous US$80 billion.
