Institutions on hunt for RMB assets, says Deutsche

25 July 2014   Category: News, Asia, China, Global, Europe   By Derek Au

Deutsche Asset & Wealth Management (DeAWM), the asset manager with 934 billion euros (US$$1.3 trillion) in AUM, expects demand from institutional investors for RMB allocations to grow amid continuing internationalisation of the currency.

Speaking at the company’s press event in London, head of DeAWM, Michele Faissola, said that both institutional and private investors were keen on additional exposure to assets denominated in the Chinese currency. He said that there was particular interest from sovereign wealth funds, which “seek diversification as AUM is growing”.

Chinese policymakers have been actively promoting the use of RMB in overseas markets. Besides London, the Chinese central bank has also empowered Frankfurt, Paris and Luxembourg to set up domestic RMB clearing houses in a move to enhance the RMB’s reputation as a reserve currency.

Likewise, Mr. Faissola believes that demand from Chinese investors for foreign assets also presents opportunities for DeAWM. He says that the impending launch of the mutual recognition of funds scheme between Hong Kong and Mainland China “is clearly an opportunity to accelerate the delivery of international products to Chinese investors”.

Mr. Faissola believes that DeAWM is well positioned to provide Chinese investors with differentiated international investment products in emerging assets classes, such as real estate. “We have seen, for instance, lots of Chinese interests in real estate,” he elaborates, adding that DeAWM “could deliver interesting ideas for those investors”.

During the press event, Mr. Faissola also gave a business update on DeAWM. He said that the firm achieved record inflows of net new money in the second quarter, after recording net inflows of 2.6 billion euros in the first quarter, mainly due to contributions from alternatives, passive and wealth management products.

Addressing the key challenges to the overall industry, Mr. Faissola said that asset managers need to “have the scale” and be efficient to deliver the best services to clients amid ongoing margin pressure. He added that they must also overcome the impact of regulations, which are becoming more fragmented and complex.