Exclusive: China to lift curbs on foreign fund offshore investments

Fri May 19, 2017 7:37am EDT
 
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By Sumeet Chatterjee and Michelle Price

HONG KONG (Reuters) - China will lift a two-year suspension on foreign funds raising money in the country to invest overseas as early as June, people familiar with the matter said, a sign that Beijing is getting less anxious about capital outflow pressures.

Some industry executives said the expected resumption of the Qualified Domestic Limited Partnership (QDLP) program may mean that an official crackdown on capital outflows and a weakening of the dollar have provided the authorities with more policy flexibility.

The Shanghai Municipal Government Financial Services Office, which runs the QDLP scheme, did not respond to requests for comment, while the State Administration of Foreign Exchange (SAFE), which controls the capital account, did not immediately respond to a request for comment.

The QDLP program allows foreign fund managers to raise money within a set quota from high net-worth Chinese investors through a wholly-owned onshore fund management company and invest the cash overseas.

Launched in 2013, QDLP was one of a handful of controlled schemes that allowed Chinese to invest money overseas. It was subsequently informally suspended in 2015 after the stock market crashed and lost around 40 percent of its value.

The licenses and accompanying quota had previously been issued in batches, with authorities expected to issue the long-awaited next round in coming weeks, said two people briefed by regulators on the matter.

One of these people said authorities will, however, be a "little cautious" granting only around half a dozen licenses, these people said. The quota will also be lowered from $100 million per manager during the previous batches to between $50 million and $75 million this time round, one of these people and a third individual briefed on the matter said. That could amount to between $300 million to $450 million in fund flows abroad.

The sources said SAFE must ultimately sign-off on lifting the suspension.   Continued...