REGULATORS unveiled a plan Friday to allow qualified domestic institutional investors (QDIIs) to plough funds into overseas equities for the first time, a move which could make the so-called QDII program more appealing.

The China Banking Regulatory Commission (CBRC) said that banks could now pour client funds into stocks or structured products overseas, but they could not invest in hedge funds.

Since launching the QDII program last April, commercial banks and fund managers have been investing in overseas fixed-income and money market products on behalf of clients.

But the prospect of relatively poor yields at a time when the yuan has been appreciating steadily against the U.S. dollar has meant that only a fraction of the more than US$14 billion in QDII quotas has actually been used.

Friday’s move to allow banks to invest client funds in higher yielding instruments was aimed at further enriching the investment possibilities for QDII products and promoting the stable development of the program, CBRC said in a statement posted on its Web site.

The QDII program was created in part to spur capital outflows, as a way of reducing China’s balance-of-payments surplus and to ease upward pressure on the yuan.

The banking regulator said that any one QDII fund could invest no more than 50 percent in foreign stocks and less than 5 percent in any single share.

(SD-Agencies)