CHINA refrained from granting new quotas for residents to invest in overseas markets for a fifth month in August, the longest halt in six years, as authorities seek to stem weakness in the yuan.

    The State Administration of Foreign Exchange, which has approved 132 local institutions to put as much as US$89.99 billion (US$128.1 billion) in offshore assets via its Qualified Domestic Institutional Investor (QDII) program, hasn’t granted new allocations since March. Quotas for overseas investors to access domestic capital markets rose US$16.4 billion to US$140.3 billion in the period, data from the regulator show.

    The yuan traded 1.4 percent weaker outside of China than inside the country yesterday, indicating depreciation pressure.

    China is trying to open its capital account enough for the yuan to win reserve status from the International Monetary Fund, while trying to curb an exodus of funds from an economy expanding at the slowest pace since 1990.

    Chinese investors are seeking to diversify in overseas assets after domestic shares tumbled from this year’s peak June 12. The yuan slumped 3.6 percent in Shanghai and 4.9 percent in Hong Kong in the past 12 months.

    “Interest is there but whether the money can leave in the short term is the problem,” said Thomas Kwan, Hong Kong-based chief investment officer at Harvest Global Investments, whose Chinese unit offers QDII funds. “To avoid triggering excessive yuan outflows, I don’t think regulators would grant additional QDII quotas in the short term.”

    China’s QDII quota increased 8 percent in the first quarter of this year, after falling 1 percent in 2014 as the regulator withdrew some unused ones. That for Qualified Foreign Institutional Investors, allowing overseas companies to buy domestic securities with foreign currency, has expanded 15 percent this year.

    “Policymakers are not enthusiastic about granting more QDII quotas right now,” said Chen Xingdong, chief China economist at BNP Paribas SA in Beijing. “The depreciation pressure has intensified. They don’t want to do anything now that could strengthen capital outflows.” (SD-Agencies)