A-share QFII equity funds see recovery in July

14 August 2014   Category: News, Asia, China, Global   By Hui Ching-hoo

A-share QFII equity funds showed signs of improvement in July with a return of 7.41% month-on-month, although year-to-date performance has yet to return to the black, with an accumulated loss of 1.32%, according to a report from Lipper.

The recovery in July coincided with a rally in the A-share market, which saw the benchmark Shanghai Composite Index (CSI) rise by 7.48% during the month, making it the best performing market within the Asia Pacific region.

Over the first seven months, the ING China A-share Fund II Class J topped its peers to secure a return of 7.83%. It was followed by the iShares FTSE A50 China Index ETF and the Yuanta/P‐shares SSE50 ETF, which secured returns of 5.93% and 5.86%, respectively.

As for Mainland mutual funds, the report stated that gold and precious metal equity funds were the top performers in July, notching up an aggregate profit of 16.44%. Between January and July, information tech equity funds were the market leaders with a sum year-to-date return of 25.25%.

Addressing the outlook for the QFII market, Michael Wu, country head, China, at Northern Trust’s Beijing branch, said that both QFII and RQFII were important steps in opening up the domestic capital market, and moving towards full convertibility of the Chinese currency. He also predicted that both schemes would at some point be merged.

“We expect RQFII to gain popularity, especially for institutions based in jurisdictions which have been issued with RQFII quotas. It is possible that the regulator may relax some of the existing restrictions on QFII to make it equally appealing – but in the longer run, the two schemes are likely to converge into one.”