(Yicai) March 31 -- China has raised the investment quotas for domestic financial institutions approved to invest in offshore securities for the first time in nine months, lifting the total by about USD5.3 billion, in response to growing demand for offshore assets and the elevated trading premiums of popular funds.

The investment quotas for the Qualified Domestic Institutional Investor program stood at USD176.169 billion as of yesterday, up from USD170.869 billion as of Dec. 31, according to data from the State Administration of Foreign Exchange. It was the first increase since last June.

Seventy-eight financial institutions received new quotas, with securities and fund entities the biggest beneficiaries, having been given USD3 billion, or 56 percent, of the newly added allocation. Essence Fund, Credit Agricole Corporate and Investment Bank, and Shangyin Wealth Management received quotas for the first time, each getting a USD80 million cap.

Because of rising Chinese demand for global asset allocation and periodic quota reductions, some popular QDII funds are trading above their net asset values in the secondary market. Twenty-four QDII funds had indicative optimized portfolio value premiums of more than 3 percent at the close yesterday, per data from Wind Information.

Among them, the Huatai-Pine Bridge CSI KRX China-Korea Semiconductor Exchange-Traded Fund had a premium of almost 25 percent, while multiple oil, gas, and technology QDII funds had premiums in excess of 15 percent.

As a result of persistently high premiums, fund managers have already issued a number of risk warnings this year, and in some cases have even “cooled things down” with temporary trading halts. So far in 2026, the Huatai-Pine Bridge CSI KRX China-Korea Semiconductor ETF has put out more than 100 warnings and has suspended trading nearly 40 times.

“The operation of cross-border ETFs is constrained by QDII quotas,” a source at a leading Chinese fund company told Yicai. “It’s difficult for the conventional arbitrage mechanism between the primary and secondary markets to fully function under the current environment, which is also the technical reason why premiums persist.”

High premiums often coincide with intense investor attention and heavy trading, the person said “Based on past experiences, the state of high premiums may converge with changes in market sentiment and the release of new quotas,” he said, adding that “quota anxiety” has become the norm at various financial institutions.

Editor: Futura Costaglione