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By Tang Guhan

Several foreign institutional investors have received quotas on issuing RMB-denominated funds, namely the Qualified Domestic Limited Partner (QDLP), in China for their investments outside of the country, as reported by the China Securities Journal recently.

Since restarting the QDLP systems at the end of 2017, a swath of companies, including J.P. Morgan Asset Management and Alliance Bernstein L.P., have acquired the fourth batch of quotas and some of them have already commenced their fundraising activities.

Different from the Qualified Domestic Institutional Investor QDII) scheme, which also helps Chinese investors to invest overseas, the QDLP program allows domestic investors to venture into alternative investments, such as hedge funds and Real Estate Investment Trusts (REITs) among others.

The Chinese government has made strides in opening up its markets both from inside to outside and vice versa.

Starting from the piloting of the QDLP program in Shanghai, the State Administration of Foreign Exchange has expanded their quotas for pilots to USD 5 billion since April 2018.

"Retail investors with a minimum investment amount of one million yuan could use RMB or other exchanged currencies when investing in overseas markets, and their yields would ultimately be counted in RMB," said a foreign institutional investor.

The RMB has depreciated around 10 percent against the USD since the beginning of this year. The demand for adding global assets into investment portfolios are increasing among domestic investors with the appreciation of the USD.

While currencies do have ups and downs, the benefits in lowering the uncertainty and risks in portfolios through multi-types of assets around the globe outweigh the speculation yields in currency exchanges as reported by the China Securities Journal.

China's opening up policies for the finance sector are wooing more and more top foreign institutional investors into the Chinese markets while they are also the choice of wealthy domestic investors' as their wealth management strategy.