China may loosen limits on foreign fund outflow

BEIJING: China’s central bank plans to loosen rules determining when foreign investors can bring money in and out of the country, according to people with knowledge of the matter.

The rule changes would apply to funds under the Qualified Foreign Institutional Investor programme, which grants quotas for money brought into China for investment in domestic stocks and bonds. Lock-up periods for the withdrawal of QFII funds from China would be relaxed and institutions would get more latitude over when they can bring money. Such changes would suggest that turmoil in China’s stock market haven’t derailed plans by the People’s Bank of China to further open the nation’s capital account.

“I’m surprised by the move as the market is currently expecting the PBOC to tighten controls to stem outflows,” said Eddie Cheung, a Hong Kong-based currency strategist at Standard Chartered Plc.