On the back of increased liberalization around Chinese investment laws, two of Koreas largest institutional investors this week obtained licenses to buy local securities, the Wall Street Journal (WSJ) reported.
The QFII license paves the way for sovereign wealth fund Korea Investment Corporation (KIC) and the National Pension Service (NPS) of South Korea, the worlds fourth largest pension fund by assets, to diversity their portfolios through purchases of Chinese Class A shares and bonds as early as this year.
An official at the Ministry of Strategy and Finance said the Korea Investment Corporation be able to start investing in Chinese securities sometime in 2012, said the WSJ report, as it typically takes up to six months to get a quota assigned. KIC and the Korean National Pension Service applied for QFII licenses last year.
The NPS said Sunday it had received approval for a QFII license, while KIC said today that it has received its license, said the WSJ.
The NPS will incorporate the Renminbi-denominated assets into its foreign exchange reserves, which are currently $306 billion.
KIC has about $41.5 billion in assets under management, with some exposure to Chinese assets. QFII license holders are assigned a $200 million quota in Renminbi-denominated assets at the start.
State Street was mandated as global custodian by the NPS in 2007.