THE government had issued US$300 million in foreign exchange quotas to foreign institutions to invest in Chinese securities markets, which analysts said could bolster the sagging stock market, the Shanghai Securities News said yesterday.

It said that the State Administration of Foreign Exchange (SAFE), the nation’s foreign-exchange regulator, had already received quota applications exceeding the entire US$20 billion in additional quotas recently allotted by SAFE to the Qualified Foreign Institutional Investor (QFII) program, which allows foreign institutions to invest in Chinese securities markets.

The US$300 million issue signalled a formal resumption of QFII foreign exchange quotas since their suspension in February 2007, when the total US$10 billion quota allotted to the program by SAFE had been used up.

SAFE had flagged an imminent end to the suspension in December when it said it would triple the QFII quota to US$30 billion. SAFE chief Hu Xiaolian said last month that the administration had given its first QFII approval since the February 2007 suspension, but gave no details.

Sources familiar with the matter said the approval had authorized Norway’s Government Pension Fund to invest US$200 million in Chinese securities.

The Shanghai Securities News yesterday quoted an authoritative source as saying that SAFE had approved US$300 million in quotas from the additional US$20 billion allotment, formally confirming that it had started to use the additional quota.

Analysts believed the resumption of quota issue would lend support to the domestic stock market, the paper said. (SD-Agencies)