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Cautiously, Foreign Firms Play Chinese Stock Markets

Stocks in this article: BEN UBS

BEIJING (TheStreet) -- Asian affiliates of Franklin Templeton (BEN), Pimco and UBS (UBS) have just gotten into the China equities game, helping push the Chinese government's licensed quota for overseas institutional investors past the $50 billion mark for the first time.

But it's a cautious game that these and some 200 other firms are playing by investing in China's lackluster equities markets through the government's Qualified Foreign Institutional Investor program.

The government's State Administration of Foreign Exchange, or SAFE, said Monday seven, new QFII players had each received a government investment quota of between $50 million and $100 million.

They include China Life Franklin Asset Management, which is a Hong Kong-based venture of Franklin Templeton and China Life Insurance; a Swiss-Korean joint venture called UBS Hana Asset Management; and the Hong Kong office of U.S. bond giant Pimco.

In addition, the government this month gave several existing QFII players permission to boost their quotas. JPMorgan Securities added $300 million to its previous allowance, bringing the investment bank's total quota to $750 million.

The new quotas brought the combined investment potential of what are now 235 QFII participants from around the world to $51.4 billion. That's only one-third of the total $150 billion that the government would like to see foreign institutional investors bring into China's markets.

Most of the licensed firms are working trading decks with modest quotas. Of the 58 investors granted QFII access in 2013, according to SAFE's records, only five committed more than $100 million.

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