China to Launch QDII2 Overseas Investment Scheme

The official Securities Times reported that China will soon launch a new pilot scheme, the Qualified Domestic Individual Investor programme (commonly known as QDII2). It will initially be launched in six cities: Shanghai, Tianjin, Chongqing, Wuhan, Shenzhen and Wenzhou.

For Chinese aged above 18, as long as they are residents from those six cities with at least 1 million Yuan of financial assets in their account for the last 3 months, they can apply to join the programme. After submitting documents such as an account application, confirmation of the legality of the investment funds and commitment letter stating that the investors will undertake the investment risk on their own, the bank will evaluate their credit profile and open an overseas investment account, which includes one RMB account and one foreign currency account.

The QDII2 mainly covers three overseas investment areas: first, financial sector, including stocks, bonds, funds, insurance, foreign exchange and derivatives; second, industrial Investment, including greenfield investment, mergers and acquisitions, and joint venture etc; third, fixed assets investment which includes purchasing properties.

The so-called QDII2 is a programme that allows mainland individual investors to directly buy and sell securities on overseas stock exchanges while the RMB capital account convertibility is still under control.  Compared with the previous QDII scheme, QDII2 is a breakthrough in terms of allowing individual investors to directly invest in global stock and bond markets. On 18^th May, the State Council has pointed out in “Guidelines for Reform Priorities in 2015” that China will promote a pilot scheme for mainland individual investors to invest in the overseas market,  steadily advance specific matters of Shanghai-Hong Kong stock connect and facilitate the establishment of Shenzhen- Hong Kong stock connect pilot programme.

The implementation of QDII2 programme will make it much easier for investors to invest in the overseas property market.

Gibbs Investment produces this article based on the report by Security Times and other sources. Picture is from Google Image.