Standard Chartered halts new offshore investments for Chinese clients

StanChart halts new offshore channel investments: Standard Chartered has decided to suspend new investments by its clients in China into offshore products via a quota-based channel, citing "commercial reasons." 

The move comes amid increased demand for overseas investments fuelled by weaknesses in the local market and currency.

The qualified domestic institutional investor (QDII) programme, launched in 2006, serves as the primary outbound investment channel for Chinese investors. 

It allows Chinese wealth and corporate clients to invest in offshore funds, bonds, and other structured products within a quota set by the State Administration of Foreign Exchange (SAFE).

Standard Chartered's decision to halt new subscriptions into offshore-domiciled funds sold via the QDII programme reflects the surge in demand for overseas assets, particularly as China's domestic market struggles. 

The country's blue-chip CSI300 index hit five-year lows recently, down 18 per cent over the past year due to challenges in the property sector and limited government stimulus.

While there has been speculation regarding potential guidance from Beijing, experts suggest that the suspension is more likely a result of quota limitations and commercial considerations. 

Capital outflows from China have accelerated amid economic and geopolitical concerns, prompting investors to seek opportunities in other markets, such as Japan.

StanChart's move coincides with renewed pressure on China's yuan and ongoing market support measures initiated by Beijing. 

Despite these challenges, StanChart's CEO Bill Winters remains optimistic about China's wealth management opportunities and the bank's cross-border services.

Since 2006, StanChart has been allocated a QDII quota of $2.8 billion, ranking third among foreign banks. 

However, details regarding the utilisation of these quotas remain undisclosed by regulators and banks alike.

(With Reuters Inputs)