China lifts $1bn ceiling on select list of foreign investors to shore up equities slump

China has scrapped a ceiling on investments by overseas sovereign wealth funds (SWFs) and central banks in its capital markets, as government attempts to encourage long-term foreign ownership and shore up slumping equities.

SWFs, central banks, and monetary authorities can now exceed the $1bn (€759m) limit that still applies to other qualified foreign institutional investors, according to revised regulations posted on the State Administration of Foreign Exchange’s website on Friday.

On Friday, the Shanghai Composite Index jumped the most since Oct 2009 after the head of the Hong Kong Monetary Authority said the previous day that China may relax or abolish a rule that requires renminbi-qualified foreign institutional investors (QFII) to keep most of their funds in bonds. Since Guo Shuqing took over as chairman last year, the China Securities Regulatory Commission has cut trading fees, pushed companies to increase dividends, and allowed trust companies to buy equities.