The Korea Herald


KIC gets $200m investment quota from China

By Korea Herald

Published : March 13, 2012 - 14:20

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HONG KONG (Yonhap News) ― South Korea’s sovereign wealth fund has received a regulated quota of $200 million to invest in China’s stock and bond markets, officials said Tuesday.

Korea Investment Corp. received the investment quota from the Chinese State Administration of Foreign Exchange about three months after it was granted a license to join China’s qualified foreign institutional investor (QFII) program, a source at the company said.

The company will complete its preparation for trading in Chinese securities by April, he said.

In December last year, the sovereign fund earned approval from the China Securities Regulatory Commission to invest in yuan-denominated stocks and bonds.

Those securities issued by mainland China-based companies in the financial markets of Shanghai and Shenzhen are generally only available for purchase by Chinese nationals.

Foreign investment in the Chinese-currency based bonds and shares, called A-shares, is only allowed through a tightly-regulated structure under the QFII system.

Established in 2005, KIC manages a $42.9 billion fund from the central bank’s foreign exchange reserves and the finance ministry’s foreign exchange stabilization bonds. It reported an average yield of minus 3.3 percent in 2011 mainly due to losses from its exposure to sluggish global stock markets.