CHINA will soon launch a new pilot program in six cities that will allow individuals to invest directly overseas, the Securities Times reported, potentially unleashing billions of dollars in Chinese savings on global stock and bond markets.

    The Qualified Domestic Individual Investor program, commonly known as QDII2, is the second iteration of a program whose first version was limited to institutions. It will initially be launched in six Chinese cities: Shanghai, Tianjin, Chongqing, Wuhan, Shenzhen and Wenzhou, the Securities Times said Tuesday, quoting unnamed sources.

    Individuals with at least 1 million yuan (US$160,000) in financial assets can apply to join, the report said.

    QDII2 would be China’s latest step to deregulate the nation’s capital markets, following the launch of the Shanghai-Hong Kong stock connect program last November, which allows mainland individuals to buy stocks in Hong Kong.

    The previous QDII program, which allowed institutions to invest overseas within set quotas, proved unpopular with most investors, which analysts blamed poor marketing by domestic fund managers and a general lack of interest among Chinese retail investors.

    QDII2 would be wider in scope than the Shanghai-Hong Kong connect program, which is focused on guiding investors into stocks related to China and offers little opportunity for risk diversification, while keeping a tight rein on the risk of capital flight.

    QDII2, on the other hand, will allow individual Chinese investors to snap up shares in New York, London or Paris.

    The report gave no detailed time frame for the launch, saying only that it would be “soon.”

    In March, Shanghai said it hoped to start QDII2 in its free trade zone this year.

    (SD-Agencies)