Dozens of foreign financial services firms, such as ABN AMRO, are vying to be part of China's plan to invest some of its growing wealth in overseas markets.
But analysts and industry sources say competition for a licence to let foreigners invest Chinese capital abroad will be hard-fought, with regulators leaning towards approving initially just a few players and favouring domestic over foreign firms. "The process will normally focus on what we call the national champions, looking at the Bank of China, ICBC and the like," said Peter Alexander, head of Shanghai-based consultancy Z-Ben Advisors.
"While the foreign banks, the HSBCs, Citibanks, ABN AMROs of the world, will be more than welcome to apply, it may not (necessarily be) the same as saying that they will receive some sort of licence."
Beijing set the landmark Qualified Domestic Institutional Investor (QDII) programme in motion in April, when it changed rules to allow Chinese banks, insurers and fund managers to start investing in foreign financial markets. Hong Kong is expected to be a top destination for funds.
The programme aims to help earn higher returns for Chinese funds, and is also seen as an attempt to reduce pressure for appreciation of the yuan by increasing capital outflows.
For foreign financial firms, the programme offers an irresistible opportunity - access to fund flows from a country with more than $1.8 trillion in personal savings. QDII licences are the entry tickets, which they need to work with local partners or to offer such services in China on their own.
Some foreign banks also see QDII as a chance to develop ties with local institutions and prepare for further opening of China's banking sector in December, when Beijing is likely to let foreign banks offer yuan-denominated services to local residents.
"As a foreign bank, we are not yet allowed to offer yuan-denominated services to local residents at present. But we can work with Industrial Bank, helping its local clients to invest overseas, after we get a QDII licence," said Johnson Fu, head of China for Hong Kong's Hang Seng Bank.
In recent weeks more than 10 foreign banks, from top Dutch lender ABN AMRO to Italy's Banca Lombarda, have applied or prepared to apply for QDII licences, local banking sources told Reuters.
State media reported this month that the China Securities Regulatory Commission had organised a committee to review QDII applications, a signal that Beijing might soon announce the first group of QDII players.
Market sources told Reuters that regulators might just pick two or three financial institutions, including one fund manager and possibly a domestic bank and a foreign lender.
Shanghai-based Hua An Fund Management Co is believed to be one of the most likely investment managers to win a QDII licence. A central bank source told Reuters this week that foreign exchange regulators had approved an initial investment quota of $300 million for Hua An under the QDII programme. Bank of Communications, China's fifth biggest bank, may be the first Chinese banking player to get an entry ticket.
Many analysts expect that to avoid destabilising the currency market, China will expand QDII only gradually, and will work ultimately towards balancing QDII outflows and QFII inflows - a balance that would make it easier to liberalise the yuan trading system.