(Yicai) July 2 -- Newly added quotas for Chinese financial institutions approved to invest in offshore securities surged almost 80 percent in the first half from a year earlier, reflecting ongoing capital account opening, stable foreign exchange reserves, and growing demand for global asset allocation among institutional and retail investors.

Total approved quotas under the Qualified Domestic Institutional Investor program reached USD176.169 billion as of June 30, according to data released by the State Administration of Foreign Exchange. That was USD5.3 billion more than at the end of June last year, after the regulator granted no new quotas in the second half of 2025.

China’s forex reserves remain stable at around USD3.4 trillion, providing a solid foundation for quota expansion. At the same time, a crackdown on unauthorized cross-border securities activities has pushed more investors toward approved channels, increasing the need for higher QDII quotas.

The increase was prompted mainly by steady forex reserves and evolving demand for asset allocation among residents, said Tian Lihui, dean of Nankai University's Finance and Development Institute.

Specifically, 17 insurers were given USD1.32 billion of the newly added quotas. Fifteen of them received an increase of USD80 million each, while two received an increase of USD60 million each.

“Over the past two years, a number of insurers have requested larger overseas investment quotas from regulators, while others are in the process of applying for QDII qualifications," Liao Bo, chief macroeconomic analyst at Northeast Securities, said to Yicai. 

Since the opening of QDII for global investments in 2004, the use of such quotas has undergone several rounds of changes, with the lack of quotas for some institutions becoming a temporary constraint, Liao said, adding that in terms of asset allocation, US Treasury bonds and Hong Kong and US stocks are relatively active. The quotas for insurers will likely be increased in the future, he noted.

The use of QDII quotas by insurers has undergone many changes since the program launched in 2004, Liao said. For some, limited quota availability constrains overseas diversification. He added that US Treasuries, Hong Kong equities, and US stocks remain among the most favored offshore assets, and insurers’ QDII quotas are likely to increase further over time.

At the end of the first quarter, QDII asset holdings overseas remained heavily concentrated geographically, according to data from Wind Information. Hong Kong and the United States together accounted for more than 90 percent of the market value of all offshore investments. Holdings in Hong Kong totaled CNY316.1 billion (USD46.6 billion), representing 51 percent of the total, while US investments amounted to CNY246.6 billion, or nearly 40 percent.

Liao expects China’s economy to continue its gradual recovery, creating conditions for corporate earnings to bottom out and rebound. With US Treasury yields remaining at relatively elevated levels, insurers may become increasingly proactive in deploying their QDII quotas to expand exposure across Asia-Pacific markets, he added.

Among sector opportunities, Liao highlighted Hong Kong-listed internet companies as a key potential growth area, citing continued expansion across their value chains. Advances in artificial intelligence and other emerging technologies are bringing a new Kondratieff Wave, strengthening the core businesses of the broader tech sector while creating new high-value commercial applications, Liao stressed.

Editor: Martin Kadiev