HONG KONG, Nov 8 (Reuters) - China Southern and Oriental Patron (CSOP), an asset management firm, has used up its 10 billion yuan ($1.60 billion) quota under the Renminbi Qualified Foreign Institutional Investor scheme to invest in China's A-share market through a yuan exchange-traded fund.
The strong demand for the fund suggests a renewed appetite for Chinese equities amid signs that growth in the world's second-largest economy is stabilising.
"China's macro economy is displaying a clearer picture now and the onshore A-share stock market has shown stronger momentum, which has led to very active trading," Ding Chen, chief executive officer of CSOP Asset Management, said in a statement late on Wednesday.
Under the RQFII scheme launched last year, qualified foreign institutional investors are permitted to channel their offshore yuan funds raised overseas, mainly in Hong Kong, into mainland stock and bond markets.
CSOP was granted an additional 3 billion yuan RQFII quota by China's State Administration of Foreign Exchange recently due to strong demand for the yuan exchange-traded fund, and the fresh quota was exhausted within days.
In the past month, the CSOP yuan ETF's average daily trading volume reached 119 million yuan and on November 2, the volume reached 500 million yuan, according to the company.
The company also said the CSOP A50 Exchange-Traded Fund (ETF) that tracks the FTSE Xinhua China A50 index has added a Hong Kong dollar trading counter from Thursday in addition to the yuan trading counter launched in August.
The CSOP A50 ETF's Hong Kong dollar counter traded at HK$9.22 on its debut, while its yuan counter traded at 7.41 yuan at 0200 GMT.
China introduced the RQFII scheme in 2011 with an initial quota of 20 billion yuan and raised that to 70 billion yuan this year to give foreign investors more exposure to the onshore yuan assets.
Chinese media reported that Beijing is considering adding a further 100 billion to 200 billion yuan to the scheme, following a request from financial authorities in Hong Kong.
The other ETFs investing in the mainland stock market are ChinaAMC CSI 300 Index ETF , E Fund CSI 100 A-share Index ETF, and Harvest MSCI China A Index ETF .
Three of the four ETFs can now be traded in both yuan and Hong Kong dollar, except E-fund's ETF which will add its Hong Kong dollar trading counter from Friday.
$1 = 6.2437 Chinese yuan Reporting by Michelle Chen; Editing by Sanjeev Miglani