July 05, 2007	Thursday	Jamadi-us-Sani 19, 1428

BEIJING, July 4: China will expand the Qualified Domestic Institutional Investor (QDII) scheme soon to allow domestic investors greater access to buy foreign securities, the Xinhua news agency said on Wednesday.

The quota would be expanded to cope with the increasing number of qualified institutions in the programme and growing demand for QDII products, the agency quoted Li Dongrong, a vice chief with the State Administration of Foreign Exchange, as saying.

The programme was started in 2006 to channel domestic liquidity overseas in part to ease the rising pressure of increasing capital inflows on the Chinese currency, the yuan.

China has granted quotas to date of $14.8 billion for 19 banks, $5.2 billion for insurance companies and $500 million for a fund management company.

While only a small fraction of the approved quotas have been used due to the limited investments available, institutions hope further easing of restrictions will attract more investors.

Interest in QDII has been subdued as mainland investors still prefer to invest at home amid soaring domestic equity markets and expectations the yuan will continue to appreciation.—Reuters