China and US Equity Analyst

Roger Xie

10 year investment experience on public and private equity. Deep-dive fundamental research. Specialize in China and US market.

China A-Share Strategy: Strong Fundamental Recovery and Decelerated Liquidity Growth

Poverty/ Debt/ Xi Jinping/ Hong Kong/ Space

China A-Share Strategy: Leading the Race for Digital Currency

China A-Share Strategy: R/QFII Quota Removal to Offer More Attractive Channel to Invest In China

China A-Share Strategy: Further Reform at Chinese-Style NASDAQ Exchange (ChiNext)

China A-Share Strategy: What Are Mutual Funds Buying in 1Q? Tech and Pharma

Cross Asset Strategy

<ul>
<li>China securities watchdog revealed the latest reform on QFII/RQFII (Qualified Foreign Institutional Investor) scheme to further open up China domestic capital market. The new rule will become effective on Nov. 1, 2020. This is another milestone for China capital market reform and will boost up foreign fund inflow in the long-run. We have written the reform measures early this year: <a href="https://www.smartkarma.com/insights/china-a-share-strategy-r-qfii-quota-removal-to-offer-more-attractive-channel-to-invest-in-china" target="_blank" rel="noopener">China A-Share Strategy: R/​QFII Quota Removal to Offer More Attractive Channel to Invest In China</a>
</li>
<li>The most significant changes are the additional investment products that foreign fund managers can participate: 1) non-hedging purpose investments in index futures/options, 2) margin financing and securities lending for short-selling purpose, 3) private investment funds, 4) FICC derivatives in commodity exchanges and inter-bank market. We believe these reforms could offer comprehensive investment solutions to sophisticated institutional investors.</li>
<li>Foreign Funds' China A-share positions have accounted about 4% of A-share total market-cap, or 9% of A-share free-float market-cap by the end of 1H 2020. Nowadays, foreign investors have multiple channels to deploy their capital into China A-share market: QFII scheme, RMB-QFII scheme, or stock connect program via Hong Kong exchange (<a href="https://www.smartkarma.com/entities/hong-kong-exchanges-clearing" target="_blank" data-smartkarma-citation="entities:490:1" rel="noopener">HKEX (388 HK)</a>).  Given the increasing weight of China A-share in global benchmark indices, we believe foreign funds' China A-share positions will continue to rise and will reach 10% of A-share total market-cap in next 10 years.</li>
</ul>


China securities watchdog revealed the latest reform on QFII/RQFII (Qualified Foreign Institutional Investor) scheme to further open up China domestic capital market. The new rule will become effective on Nov. 1, 2020. This is another milestone for China capital market reform and will boost up foreign fund inflow in the long-run. We have written the reform measures early this year: China A-Share Strategy: R/​QFII Quota Removal to Offer More Attractive Channel to Invest In China

The most significant changes are the additional investment products that foreign fund managers can participate: 1) non-hedging purpose investments in index futures/options, 2) margin financing and securities lending for short-selling purpose, 3) private investment funds, 4) FICC derivatives in commodity exchanges and inter-bank market. We believe these reforms could offer comprehensive investment solutions to sophisticated institutional investors.
Foreign Funds' China A-share positions have accounted about 4% of A-share total market-cap, or 9% of A-share free-float market-cap by the end of 1H 2020. Nowadays, foreign investors have multiple channels to deploy their capital into China A-share market: QFII scheme, RMB-QFII scheme, or stock connect program via Hong Kong exchange (HKEX (388 HK)).  Given the increasing weight of China A-share in global benchmark indices, we believe foreign funds' China A-share positions will continue to rise and will reach 10% of A-share total market-cap in next 10 years.


China A-Share Strategy: Deregulation in QFII/RQFII Scheme to Boost up Foreign Fund Inflow