China's latest move to expand the investment quota under its RMB Qualified Foreign Institutional Investors (RQFII) program is likely to shore up investors' confidence in the yuan-denominated A-share market, experts said.

The China Securities Regulatory Commission, the People's Bank of China and the State Administration of Foreign Exchange have announced to increase the investment quota under the RQFII pilot program by 200 billion yuan (31.8 billion U.S. dollars). It brings the total quota to 270 billion yuan.

Li Daxiao, director of the Yingda Securities Research Institute, said the quota expansion is favorable news for China's A-share market. He said it will facilitate more overseas capital to enter the market.

"The entry of RQFII capital into the A-share market will help balance the market's supply and demand and form a rock bottom in the A-share market," Li said.

Chen Li, analyst with the UBS Securities, agreed, saying that the entry of overseas capital into the A-share market will help improve market sentiment in the short term.

The RQFII mechanism was launched in December 2011 to widen investment channels for overseas yuan funds on the Chinese mainland. It allows qualified investors to invest yuan-based funds raised in Hong Kong in the mainland securities market within a permitted quota. Endi

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