China ETFs surge as offshore investors look to avoid QFII restrictions

China exchange-traded funds have experienced record levels of inflows in the last six months as international investors seek exposure to a market that has long been difficult to access, given the QFII restrictions

International interest in Chinese equities was at a post-financial crisis low, after the Chinese indexes suffered multi-year slumps making them among the worst performers in Asia. Concurrently, some of the most successful China ETFs in the market were seen as expensive, and though they had seen rapid growth this expense was considered to be hindering them from growing to their potential. This cost was largely due to the shortage of additional Qualified Foreign Institutional Investor (QFII) quota