Chinese investors are rapidly expanding their investments in overseas assets, particularly US stock funds. Authorities raised the outbound investment quota, unleashing pent-up demand amid domestic yields hovering near record lows. China's State Administration of Foreign Exchange last month raised the outstanding investment quota under the Qualified Domestic Institutional Investor program by 680 million dollars, bringing it to a record 183 billion dollars. The fact that funds investing in US stocks moved to curb inflows just days later underscored how Chinese investors are rushing to gain exposure to US equities. One QDII fund tracking the Nasdaq 100 index raised its daily inflow cap from 10 yuan to 5,000 yuan on September 9, but the next day its manager, Wanji Asset Management, again cut the per-person daily inflow limit for individual investors to 100 yuan. Such moves highlight the scale of the challenge the Chinese government faces in stemming capital outflows. Confidence in the domestic economy remains fragile, with the yield on China's 10-year government bond more than 3 percentage points below that of US Treasuries.
Wanji's Nasdaq 100 QDII fund saw such strong investor inflows that it cut daily subscription caps, reflecting surging demand for its overseas fund product.
