China will soon launch a new pilot scheme in six cities allowing individuals to invest directly overseas, the official Securities Times reported on Tuesday, potentially unleashing billions of dollars in Chinese savings on global stock and bond markets.
The Qualified Domestic Individual Investor program, commonly known as QDII2, is the second iteration of a scheme whose first version was limited to institutions. It will initially be launched in six Chinese cities: Shanghai, Tianjin, Chongqing, Wuhan, Shenzhen and Wenzhou, the Securities Times said, quoting unnamed sources.
Individuals with at least 1 million ($160,000) of financial assets can apply to join, the report said.
QDII2 would be Beijing's latest step to deregulate China's capital markets, following the launch of the Shanghai-Hong Kong stock connect last November which allows Chinese individuals to buy stocks in Hong Kong.
The previous QDII scheme, which allowed institutions to invest overseas within set quotas, proved unpopular with most investors, which analysts blamed poor marketing by domestic fund managers and a general lack of interest among Chinese retail investors.
QDII2 would be wider in scope than the Hong Kong connect program, which is focused on guiding Chinese investors into stocks related to China and offers little opportunity for risk diversification, while keeping a tight rein on the risk of capital flight.
QDII2, on the other hand, will allow individual Chinese investors to snap up shares in New York, London or Paris.
The report gave no detailed time frame for the launch, saying only that it would be "soon".
In March, Shanghai said it hoped to start QDII2 in its free trade zone this year.