Chinese Regulator increases quota for QFII

With a slight downturn in economic growth Chinese regulators are giving foreign institutional investors more leeway to invest in yuan denominated securities. The six Qualified Foreign Institutional Investors that are allowed to trade/ invest in Chinese yuan securities have been granted an increase in the quota from $500 million to $600 million for January 2012.

Chinese has been restricting its financial markets to foreign investors, most trading is either done in Hong Kong or Singapore. Chinese regulators have been edging closer to liberalising the economy by allowing institutional investors to invest in Chinese stocks.

China's equity markets has around 70% retail participation and is prone to extreme Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term as retail traders tend to follow the rumour.

The QFII regulatory framework was established in 2002 to allow foreign investors to invest directly in China’s capital markets.

China's massive manufacturing industry has been 'ushing' regulators to provide better products for hedging purposes, The regulators allowed offshore use of renmbini in 2009 as a pilot study and the move triggered Hong Kong taking over 553.6 billion of Yuan deposits.

Forexmagnates Q4 report for 2011 has a detailed analysis of spot FX in China.