Report: China considering PE for QFII

Chinese regulators may allow private equity funds to join the Qualified Foreign Institutional Investor program to further open the nation's capital markets.

The China Securities and Regulatory Commission (CSRC) is consulting investment bankers about the possibility of bringing in private equity and hedge funds into its Qualified Foreign Institutional Investors (QFII) regime, according to press reports citing people familiar with the matter. 

Currently, major QFIIs include brokerages, banks, mutual funds and insurers. Under the program, foreign institutions can invest in China’s stock market by obtaining an investment license and a foreign exchange quota from China’s regulators.  

“The regulator's attitude is open and willing to permit more qualified investors as long as they abide by the rules and regulations,” stated a Shanghai Daily report citing a banker close to the regulator. “They are thinking about introducing hedge funds and even private equity companies. But the prerequisite is that risks must be controlled.” 

The next step is a feasibility study on more QFII options, the report noted. The CSRC could not be reached for comment by press time.