TAIPEI (TheStreet) -- When Hong Kong-based Value Partners Group announced this month it had won approval from China to trade in the yuan currency, leading to a coveted quota for investing in mainland capital markets, I realized what a difference 10 years makes.If the same announcement occurred in 2003, news would have quickly traveled around the world about how the firm was blazing new trails into a booming, sought-after but largely exclusive market. That year China began offering qualified foreign institutional investor, or QFII, status to foreign firms. However, the Hong Kong fund manager's deal comes at the same time as so many others it's hard to find anything new to say about its circumstances. What's new is that, via the growing pile, common people have more access to Chinese markets and more choices in how to reach them. According to official Chinese government charts, last year 72 companies got QFII status, up from 12 licenses handed out in 2003. The trend continues this year, with firms such as Investec Asset Management and UBS Global Asset Management receiving QFII licenses. Quoting a report from the Web site of government-run China Central Television, the QFII program is "rapidly expanding" this year, with the total number of approved institutions rising from 22 to 229 over the program's history. In July, China also raised the total quota for qualified foreign investors from $80 billion to $150 billion. More opening is on the way, the TV report says. "You've seen in the last eight or nine months a record number of foreign investors entering the securities market," notes Drew Bernstein, co-managing partner with Marcum Bernstein & Pinchuk, a New York audit firm with affiliations in China. Chinese officials, he says, "are clearly trying to create more investment dollars." Chinese regulators had held back on foreign investment in the past to limit flows of assets in and out of the Communist country's command economy. Foreign investment still makes up a slim fraction of the overall amount in the country's capital markets and, according to one estimate, less than 10% are institutional investors from anywhere. Still no single foreign investor can own more than 10% of a Chinese company's stock, nor can the total foreign share of a company's ownership exceed 30%. Beijing is opening suddenly to QFII because it wants to "lure more long-term international financial institutions to the Chinese market," China Central TV adds. That mission would help reanimate China's A-shares while shooting money into a slowing economy, which is forecast to grow just 7.5% this year, down from the old days of 9% to 10% growth.
But A-shares are ominously cheap. Veteran investors say Chinese stocks differ from their foreign peers because of poor transparency, inconsistent regulation and raw deals for minority shareholders. Still, the market is loaded with the big guns of Chinese firms, shares of which are sometimes perceived as paying lower mutliples. Since QFII in China is hardly an exclusive club anymore, investors shopping for exchange-traded funds or other managed products must study harder before choosing who to hire or from whom to buy shares. "The general consensus is that most investors are underweight in China because of the current capital restrictions, so there is already demand waiting for access to the China market that will jump at the chance to access A-shares," says Jay Jacobs, research analyst with Global X Management in New York. Hong Kong is a valid place to shop. Players such as Value Partners are getting a particular boost because they belong to China's two-year-old RQFII scheme, where the "R" stands for renminbi. China hatched the scheme to internationalize its currency, and Hong Kong is the chief gateway for that cause. Accordingly, since March the yuan program has begun easing up its rules. The regulations permit RQFII status for Hong Kong-headquartered firms -- some of the most knowledgeable about mainland China investment due to culture and geography -- as well as the Hong Kong offices of multinational corporation investors. RQFII investors are also now allowed to invest in whatever assets they please, no longer restricted mostly to fixed income as before. Value Partners plans to apply later for investment quotas. "This process presents huge potential for the asset management industry in Hong Kong, a major offshore renminbi center and the focal point of capital flows," company CEO Timothy Tse says in a statement. Venture capital and private equity funds in China would also keenly understand who's worth the investment, Bernstein notes. That hypothesis would favor QFII licensees such as IDG Capital Management, which received a $60 million quota a year ago. It has invested in Chinese superstars such as Baidu ( BIDU) and Ctrip ( CTRP). But top-ranked foreign venture capital and private equity firms with interests in China are largely missing from the country's qualified investor list. Investors can also study which companies have gone back for seconds after qualifying in the early days. Those names include Morgan Stanley ( MS), which received a $600 million quota in 2003 and $450 million in 2006 under an investment management company. Credit Suisse ( CS) is another case, with a $500 million quota in 2003 and another $400 million in 2008. The appetite for more would suggest something has gone well. At the time of publication the author had no position in any of the stocks mentioned. Ralph Jennings is on LinkedIn. This article was written by an independent contributor, separate from TheStreet's regular news coverage.