China steps up foreign investor push China has granted a flurry of approvals to foreign institutions to invest in equities as it steps up its attempt to lure more cash into the country's beleaguered stock markets. Coupled with a state media report that local pension funds will start investing in shares, the moves were the latest indication of how authorities are trying to inject confidence in markets that have been among the worst performing in the world for two straight years. The promise of policy support and stronger-than-expected economic growth data combined to fuel a rally on Tuesday. The Shanghai Composite Index closed up 4.2 per cent, its biggest single-day jump in more than two years. Ultimately, I think shares had fallen too much. On that basis, everyone has been becoming more confident that there will be policies to stabilise the market," said Sun Jianbo, chief strategist for China Galaxy Securities, a domestic brokerage. The Shanghai Composite tumbled 22 per cent last year and it has been the worst performer of the world's 10 biggest stock markets in the past two years, despite China's continued economic boom. The securities regulator announced late on Monday that it had awarded quotas to 14 foreign institutions in December to invest in domestic capital markets. Chinese markets are mostly off limits to foreigners and quotas granted under the Qualified Foreign Institutional Investor Program are the main way in the door. But they are very restrictive, typically capped at about $100m. The securities regulator adjusts the pace of approvals in an attempt to influence the stock market's direction. From May until October last year, when China worried that hot-money inflows were causing inflation, it granted no such quotas. But recently, as evidence has mounted of capital outflows and stock prices have tumbled, Beijing has started awarding quotas again. December was the busiest month for approvals since China launched the foreign investor programme in 2003, bringing the total number of quotas to 135. The newest recipients include the central banks of Korea and Thailand, the Kuwait Investment Authority and the Canadian Pension Plan. In what would be an even bigger boost for Chinese stocks, the China Securities Journal, an official newspaper, reported on Tuesday that regulators would allow local pension funds to invest about Rmb100bn ($15.8bn) in capital markets. China's national pension fund invests about a third of its assets in stocks, but local pension funds - managed by provinces and cities - put very little of their money into equities. Guo Shuqing, recently appointed head of the China Securities Regulatory Commission, vowed last month to bring more pension money into equities to help stabilise markets that are still dominated by small-sized retail investors. Analysts said that signals from Mr Guo that he would slow the pace of new issuances, limiting the supply of shares, also provided support for the market. Concerns about a further source of potential supply, a big pipeline of new offers, were further alleviated when Shanghai mayor Han Zheng said on Monday that the time was not right to launch a long-awaited "international board" on which foreign companies would be allowed to float shares. But Mr Sun of Galaxy Securities said that there was little chance for a sustained rally in Chinese stocks, with economic concerns still looming large. "It will be a bumpy recovery for the market, with lots of ups and downs," he said.