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Finance

MUFG granted access to China bond and equity markets

Japan's top bank obtains world's largest $870m investment quota

Mitsubishi UFJ will be the second Japanese bank to join the RMB Qualified Foreign Institutional Investor framework. (Nikkei Montage)

TOKYO -- Japan's top lender MUFG Bank has obtained a quota under the Renminbi Qualified Foreign Institutional Investor scheme, a legal framework that allows overseas investors to buy bonds and stocks in China.

MUFG will be able to invest up to 6 billion yuan ($867 million), the largest quota of any bank. It is the second Japanese bank to receive a quota, after Sumitomo Mitsui Banking Corp. The change will drive more investment to Chinese companies as it becomes easier for institutions to invest directly from Japan.

Until now the largest quota was held by the European affiliate of the Industrial and Commercial Bank of China, which has a 4 billion yuan quota.

The move also supports the Chinese government's goal of internationalizing the yuan. Japan's financial markets continue to play an important role in this, and MUFG's new quota will make it easier to raise yuan-denominated funds overseas. Last year yuan-denominated settlements in the Cross-Border Inter-Bank Payments System, a Chinese system aimed at internationalizing the yuan, reached 26 trillion yuan, up 80% from the previous year.

MUFG's new quota also comes at a moment when relations between China and Japan, often plagued by disputes over territory and history, are on the mend. As tension with the U.S. has mounted, China has taken a more conciliatory approach to Japan.

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