Chinese investors flood US equity funds after Beijing lifts outbound investment caps
Chinese investors are rapidly buying US stock funds following the regulator's increase of outbound investment quotas, driven by low domestic yields and strong demand for overseas exposure.
After the foreign exchange regulator expanded the Qualified Domestic Institutional Investor quota to a historic US$183 billion, Chinese investors rushed into US equity funds, especially those tracking the Nasdaq 100. Daily subscription limits on a Nasdaq-100 QDII fund were raised from 10 yuan to 5,000 yuan, then sharply cut back to 100 yuan as inflows surged, according to research head Ivan Shi. Similar patterns appeared with China Universal Asset Management and TruValue Asset Management, which alternated between easing and re-imposing limits on their overseas funds.
The trend reflects fragile confidence in China's economy, with 10-year government bond yields more than three percentage points below US Treasury rates and domestic equities trailing US market gains. Portfolio investment recorded a US$426 billion deficit in 2025 and net outflows of US$146 billion in the first quarter of this year. Premiums on US-linked ETFs, such as a 24% premium on a Shenzhen-listed Nasdaq-100 technology ETF, illustrate the strong household demand for foreign assets.
Why it matters
The surge shows growing Chinese demand for foreign assets and challenges Beijing's control of capital outflows.
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