Nikko AM to launch Singapore’s first Chinese onshore bond fund

04 July 2014   Category: News, Asia, China, Global, Singapore   By Daniel Shane

Nikko Asset Management Asia Limited (Nikko AM) will launch Singapore’s first Chinese onshore bond fund, alongside Bank of China and DBS Bank.

The announcement of the fund, which is expected to launch mid-July, comes after Nikko AM was awarded a 1 billion RMB (US$160 million) RQFII quota in May this year.

The fund, which is still subject to regulatory approval, will be targeted at retail investors in Singapore seeking a total return of capital growth and income over the medium to long-term via exposure to the Chinese currency. It will invest in listed and unlisted RMB-denominated fixed-income instruments, and will be made available through Bank of China and DBS Bank.

“The fund is strategically significant as a long-term proposition supporting Singapore’s role as a key offshore RMB centre,” commented Eleanor Seet, president of Nikko AM Asia. “We take pride in being a forerunner in RMB internationalisation, by providing Singapore-domiciled investors with direct access to China onshore bonds, which are not readily accessible to foreign investors.”

She added that the bond fund would be first in a suite of RQFII solutions the asset manager was looking to provide.

“While there is generally strong interest in bonds in Singapore, there are limited RQFII allocations available to offshore investors. Such bond funds will provide investors with the opportunity to participate in China’s growth and add diversification to their portfolio,” added V Arivazhagan, managing director and head, regional investment and treasury products, consumer banking group, DBS Bank.

In October last year, Singapore and China agreed on a 50 billion RMB RQFII quota for the former’s financial institutions, as part of the Southeast Asian city state’s aspirations to raise its profile as an offshore RMB hub.

Among the first financial institutions to be awarded RQFII quotas in Singapore was Temasek-linked Fullerton Fund Management.