As Hong Kong and the Golden Brick nations, including Brazil, Russia and India, have been widely viewed as good options, analysts still foresee a rosy picture in the long term for the QDII program which was initiated in April 2006 to ease excess liquidity.

A latest move made by Chinese supervisors to buoy market confidence was to allow QDIIs to invest in the domestic A-share market.

The restrictions on bank QDIIs were also gradually phased out as they may invest in Hong Kong stocks instead of being confined to fixed-income products.

By early last December, the foreign exchange market regulator had verified a total of $23 billion as QDII quotas for funds, according to Sun Lujun, deputy head of the capital project department under the State Administration of Foreign Exchange.

Sun said that by the end of October, 16 QDIIs had put on the market 154 QDII products. Sun added that $28.6 billion was actually remitted abroad for QDII operation by the end of the month. The total indicates that capital flows accelerated sharply over the past few months as from April 2006 to March 2007, funds remitted abroad only totaled around $4 billion.

Trust companies and insurers are also expected to get the QDII license and put their overseas investment products on the market this year.