China's Shenzhen issues rules on outbound investment scheme

SHANGHAI, April 30 (Reuters) - China’s southern financial and technology hub of Shenzhen published rules on Friday for a pilot scheme that allows qualified domestic investors invest abroad, in an effort to meet their asset allocation needs.

According to the rules, which take effect on May 7 and run for five years, both foreign and domestic investors are allowed to establish overseas management companies to set up overseas investment entities.

These entities can invest in equities and bonds of overseas non-listed companies, privately placed and traded equities and bonds of overseas listed firms, as well as overseas private equity funds and private securities funds, the rules say.

The investments should be in line with China’s policy directions, and should not assist domestic individuals to buy homes overseas or transfer assets there.

Shenzhen said the scheme was designed to provide financial support for the development of the Guangdong-Hong Kong-Macau Greater Bay Area, and boost further financial opening and cross-border investment innovation.

Its ojectives include promotion and guidance of the orderly development of the city’s qualified domestic investors’ overseas investments.

The investment quotas should be used within 12 months of approvals and cannot be transferred. (Reporting by Luoyan Liu and Josh Horwitz; Editing by Clarence Fernandez)