Overseas fund managers are keen on holding RQFII products, targeting Chinese blue chips as a valuable long-term investment, as the valuation of A shares has dropped to a historical low level.

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An exchange traded fund product issued by China Southern Fund Co Ltd with a total value of 5 billion yuan ($788.83 million) was sold out on its debut day on Aug 20. All the buyers are qualified foreign institutional investors.

The RMB Qualified Foreign Institutional Investors, or RQFII, program was set up to allow foreign investors to use offshore yuan to buy mainland securities.

"Overseas institutional investors take the A share market very seriously, although the country's economic growth slowed in the first half," said Ding Chen, director of international business with China Southern Fund.

In addition, the increasing importance of the renminbi has attracted fund managers eager to expand business in the offshore renminbi market and share the benefits brought by the Chinese economic development, Ding said.

Another fund product under the RQFII scheme sold by the E Fund Management Co Ltd this week is also very popular among foreign investors.

By the end of July, 21 financial institutions had a total RQFII quota of 32 billion yuan, according to the State Administration of Foreign Exchange.

The China Securities Regulatory Commission raised the RQFII quota by 50 billion yuan in April, aiming to attract more foreign financial institutions to support the development of capital markets.

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