China to loosen restriction on foreign capital outflow

By FXStreet FXStreet – Living up to its commitment to further open financial markets the PboC decided to loosen rules that govern forign investors. The rules with respect to foreign investors bringing money in and moving it out of China thus can now be expected to be more relaxed. People with knowledge of the matter told Bloomberg that the change would cover funds under the Qualified Foreign Institutional Investor program. China has granted about $81 billion in quotas for foreign investment in domestic stocks and bonds.

What changes will the new rules introduce?

The central bank has also likely decided to relax the lock-up periods for the withdrawal of QFII funds from China. This clearly indicates that the central bank’s intention to further open the capital markets has not suffered a set back post the financial market turmoil and the yuan depreciation seen in early January.

However, Alex Wolf, an economist for emerging markets at Standard Life Investments Ltd. in Edinburgh said via Bloomberg that relaxing of lockup period will not impact outflow of capital. He is of the opinion that “if money wants to leave, it will leave regardless”. Having said that he believes these small changes will have a positive …read more

Source:: FX Street