China's overseas investment funds relax purchase restrictions after global sell-off

By Summer Zhen

HONG KONG (Reuters) - A number of Chinese funds that invest in overseas securities eased subscription restrictions after a global equities sell-off wiped out trillions from the markets.

At least five such funds, issued under Qualified Domestic Institutional Investor (QDII) programme, announced on Thursday they would accept bigger amounts or reopen investor subscriptions, according to fund statements.

Market participants said investors remain nervous following the global market rout at the beginning of August and some Chinese investors may have reduced appetite for assets in hot destinations such as the U.S. and Japan.

Hwabao WP Fund Management's Nasdaq Selected Equity fund decided to raise daily maximum purchase by single account to 100,000 yuan from the previous 20,000 yuan.

Similarly, a product under JPMorgan Asset Management which mainly invests in offshore mutual funds, also increased the daily investment cap to 50,000 yuan from the previous 10,000 yuan.

The move stands in contrast to the scarcity of such fund shares in the first half of the year as investors lost confidence in domestic struggling stock markets and shifted their focus to foreign assets.

Chinese money piled into QDII funds in the past few years, triggering many popular funds, such as exchange-traded funds (ETFs) that track the Nikkei 225 Index and Nasdaq, to issue risk warnings and limit subscriptions to curb the feverish interest, as well as due to their products near the quota limit.

The QDII scheme is a key outbound investment channel that allows Chinese to buy overseas securities under Beijing's strict capital controls.

It is capped by a quota, or limit on outbound investment, set by China's State Administration of Foreign Exchange (SAFE).

(Reporting by Summer Zhen; editing by David Evans)