What happened
After the State Administration of Foreign Exchange expanded QDII investment quotas at the end of August, several QDII funds issued announcements in September adjusting their purchase limits. For example, the China Merchants Fund Global Chip Industry Stock (QDII) raised its daily purchase limit from 1,000 yuan to 1 million yuan starting September 1, while the Huatai-PineBridge China-Korea Semiconductor ETF Feeder (QDII) resumed purchases on September 2 after being suspended for over half a year.
The quota increase, announced on August 28, brought the total QDII quota for 196 institutions to 183.009 billion U.S. dollars, an addition of 6.84 billion. Securities and fund companies received the largest share of the new quota, with 3.72 billion, bringing their total to 101.0 billion, which is 55.19% of the overall QDII quota.
Some funds experienced a brief loosening followed by re-tightening. For instance, the Harvest Nasdaq 100 ETF Feeder (QDII) raised its purchase limit from 10 yuan to 10,000 yuan on September 2, but then cut it to 2,000 yuan on September 3 and back to 10 yuan on September 4, loosening for only one trading day.
Why it matters
The quota expansion aims to meet growing demand for cross-border investment, but the mixed adjustments reflect ongoing concerns about high premiums and market volatility. The varying purchase limits indicate that fund managers are cautiously balancing investor demand with risk management.
The high premiums on QDII ETFs, such as the Huatai-PineBridge China-Korea Semiconductor ETF, which saw a premium rate of 35.94% in May, highlight the challenges of market speculation. The new quota may help alleviate some pressure, but the premium rate remained elevated at 9.93% as of September 3, suggesting persistent imbalances.
Key facts
The QDII quota increased by 6.84 billion U.S. dollars as of August 28, bringing the total to 183.009 billion for 196 institutions.
Securities and fund companies received 3.72 billion of the new quota, making them the main beneficiaries, with a total of 101.0 billion, accounting for 55.19% of the overall QDII quota.
The Huatai-PineBridge China-Korea Semiconductor ETF Feeder (QDII) resumed purchases on September 2 after being suspended since February 27, with a daily purchase limit of 100 yuan.
The Harvest Nasdaq 100 ETF Feeder (QDII) adjusted its purchase limit multiple times in early September, ending at 10 yuan after a brief increase to 10,000 yuan.
What to watch next
Investors should monitor whether the new quota will effectively reduce premiums on QDII ETFs, as the premium rate for the Huatai-PineBridge China-Korea Semiconductor ETF remained above 9% in early September.
Watch for further adjustments in purchase limits by QDII funds, as fund managers may continue to fine-tune their strategies in response to market conditions and investor demand.