Qualified Foreign Institutional Investor - QFII

AAA

DEFINITION of 'Qualified Foreign Institutional Investor - QFII'

A program that permits certain licensed international investors to participate in China's mainland stock exchanges. The Qualified Foreign Institutional Investor program was launched by the People's Republic of China in 2002 to allow foreign investors access to its stock exchanges in Shanghai and Shenzhen. Prior to QFII, foreign investors were not able to buy or sell shares on China's stock exchanges because of China's tight capital controls. With the launch of the QFII program, licensed investors can buy and sell yuan-denominated "A" shares. Foreign access to these shares is limited by specified quotas that determine the amount of money that the licensed foreign investors are permitted to invest in China's capital markets.

INVESTOPEDIA EXPLAINS 'Qualified Foreign Institutional Investor - QFII'

As of April, 2012, the combined quota for the Qualified Foreign Institutional Investor program was set at U.S. $80 billion. The quotas are granted by SAFE - China's State Administration of Foreign Exchange, and the quotas can be adjusted to reflect and respond to the country's economic and financial situation. Type of investments include listed stocks (excluding foreign-oriented, or "B" shares); Treasury bonds, corporate debentures and convertible bonds, and other financial instruments approved by the China Securities Regulatory Commission (CSRC). To be approved as a licensed investor, certain qualifications must be met (qualifications are dependent upon the type of investor - such as fund management companies and insurance companies). For example, fund management companies are required to have a minimum of five years of experience in assets management and must have managed at least U.S. $5 billion in securities assets in the most recent accounting year. A specified amount of foreign currency, transferred and converted to local currency, is also required for approval.

RELATED TERMS
  1. Shenzhen Stock Exchange (SHZ) .SZ

    One of three stock exchanges in the People's Republic of China, ...
  2. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock ...
  3. CNY

    In currencies, this is the abbreviation for the China Yuan Renminbi. ...
  4. China Securities Regulatory Commission ...

    The main securities regulatory body in China, which was created ...
  5. A-Shares

    Shares in mainland China-based companies that trade on Chinese ...
  6. Optimal Currency Area

    The geographic area in which a single currency would create the ...
RELATED FAQS
  1. What risks does a Foreign Institutional Investor (FII) face?

    The term "foreign institutional investor" (FII) normally refers to large, non-Indian companies investing in Indian financial ... Read Full Answer >>
  2. What is the difference between a greenfield investment and a regular investment?

    A greenfield investment is a particular type of investment where an international company begins a new operation in a foreign ... Read Full Answer >>
  3. What are the benefits for a company investing in a greenfield investment?

    Advantages of greenfield investments include increased control, the ability to form marketing partnerships and the avoidance ... Read Full Answer >>
  4. Why did China designated certain territories as special administrative regions?

    The primary reason for the People's Republic of China designating two territories as special administrative regions, or SARs, ... Read Full Answer >>
  5. What emerging markets are best positioned to benefit from growth in the utilities ...

    Emerging market economies expected to benefit the most from growth in the utilities sector include China, India, Brazil and ... Read Full Answer >>
  6. What are some examples of a Foreign Institutional Investor (FII)?

    Foreign Institutional Investors A foreign institutional investor, or FII, is a hedge fund manager, pension fund manager, ... Read Full Answer >>
Related Articles
  1. Forex Education

    Why China's Currency Tangos With The USD

    Investopedia explains: It takes two to tango, but unless both partners move in perfect cohesion, a sequence of graceful maneuvers can be reduced to a series of clumsy moves. The latter depiction ...
  2. Forex Education

    The Pros And Cons Of A Pegged Exchange Rate

    A pegged currency can give a country many advantages, but these advantages come at a price.
  3. Forex Education

    Currency Carry Trades 101

    This strategy can provide returns even if the currency pair doesn't move a cent.
  4. Mutual Funds & ETFs

    Top 3 ETFS for Investing in Germany

    Discover why Germany is considered an economic powerhouse in the eurozone, and learn about the three ETFs that provide investors exposure to Germany’s economy.
  5. Investing

    Is There Still Opportunity in Japanese Stocks?

    Japanese stocks’ strong performance has prompted market watchers to question whether there’s still a case for adding exposure to the Land of the Rising Sun
  6. Mutual Funds & ETFs

    ETF Analysis: iShares FTSE/Xinhua China 25

    Learn about iShares FTSE/Xinhua China 25 and its asset allocation and how investing in this fund comes with heightened risks of emerging market risk.
  7. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Germany

    Learn about iShares MSCI Germany, which is a nondiversified exchange traded fund that invests principally in large-cap German companies.
  8. Mutual Funds & ETFs

    Top 3 ETFs For Investing in China

    Discover the top three China ETFs. Chinese stocks tend to be quite volatile, presenting opportunities for savvy investors, given the country's high growth rate.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Emerging Markets

    Learn more about the most liquid and highly traded emerging market ETF in the world -- the iShares MSCI Emerging Markets ETF (EEM).
  10. Mutual Funds & ETFs

    Top 3 ETFs For Investing in Brazil

    Discover information and analysis of some of the most popular and best performing exchange-traded funds that offer investors exposure to Brazil.

You May Also Like

Hot Definitions
  1. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  2. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  3. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  4. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  5. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
  6. Grandfathered Activities

    Nonbank activities, some of which would normally not be permissible for bank holding companies and foreign banks in the United ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!