Feb. 27, 2007 (China Knowledge) – The State Administration of Foreign Exchange (SAFE) recently announced that the Agricultural Bank of China (ABC) has been granted a QDII investment quota of US$500 million.

SAFE has granted a total of US$14 billion in investment quota to 17 domestic and foreign commercial banks, and another US$500 million to a fund management company. So far, 19 QDII licenses have been issued to 11 domestic commercial banks, seven foreign banks and one fund management company. QDII institutions are allowed to make offshore investments by using RMB-denominated funds raised from domestic investors.

However, QDII institutions are having difficulty selling QDII products as capital gains from foreign investments are lower due to the rapid RMB appreciation. As of end November 2006, the amount of QDII products sold only accounted for less than 3% of the total QDII investment quota.

The Bank of China (BOC) <3988> <601988> recently terminated a QDII fund because the fund size was valued at less than the minimum requirement of RMB 200 million for 20 consecutive days, making it the first QDII fund to be liquidated.