Shanghai launches new RMB qualified foreign limited partner scheme
27 November 2012
By Hui Ching-hoo
Shanghai has reportedly become the first pilot city to launch the new RMB qualified foreign limited partner (RQFLP) scheme. Accordingly, Haitong International, the international arm of Haitong Securities, will be the first institution to be awarded the RQFLP license.
Under the scheme, offshore RMB can be raised and used for private equity investments in China.
An analyst at Z-Ben Advisors tells Asia Asset Management that the RQFLP scheme provides a new channel for CNH holders to invest in Mainland capital markets. However, he doesn’t expect the market response to RQFLP products to be as strong as that of RQFII products as CNH investors currently prefer highly liquid investment tools such as equities.
The RQFLP scheme is more alternative focussed and its investment horizon is long-term, which seems to be less attractive to overseas investors.
Oriental Morning Post earlier quoted the Shanghai Office of Finance Director-General Fan Xinghai as saying that the offshore RMB pool has displayed significant growth. The RQFLP program further diversifies investment channels for overseas investors and speeds up RMB cross-border capital flows.
Mr. Fan noted that the pilot scheme is not confined to Chinese securities brokerages. Rather, it is open to all overseas investors that have significant RMB deposits.
Haitong International has reportedly entered into an MOU with Bank of Shanghai with regard to its soon-to-be-launched RQFLP fund. Bank of Shanghai has been appointed the custodian bank.
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