China Universal first out the gates

11 January 2012   Category: News, Asia, China, Hong Kong   By Hui Ching-hoo

China Universal Asset Management (HK) (CUAM (HK)) will become the first Mainland asset manager to launch an RMB qualified foreign institutional investor (RQFII) product in Hong Kong when it rolls out its CUAM RMB Bondplus Fund on January 11. The firm received an RQFII quota of 1.1 billion yuan (US$174 million) from the State Administration of Foreign Exchange (SAFE) and has been approved by Hong Kong’s Securities & Futures Commission (SFC) to launch RQFII products.

According Andy Lin, chairman of CUAM (HK): “The launch of RQFII funds is not only a major development for Hong Kong’s financial sector, but also a significant milestone for the development of the financial system in China and the internationalisation of the RMB. The company is well prepared for the implementation of the RQFII scheme, and the official launch of RQFII products in the market is a truly exciting moment for all of us.” 

The subscription period for the fund commenced on January 11 and is expected to end on February 17, 2012. The initial offer price is 10 yuan. The preliminary charge is up to 5% of the initial offer price. Retail investors can subscribe for Class A units, with a minimum subscription amount of 10,000 yuan. Institutional investors can subscribe for Class I units, with a minimum subscription amount of 3 million yuan.

Min He, investment director at CUAM (HK), notes that about 90% of the fund will be allocated to fixed income, including government bonds and high quality corporate bonds. “The fund offers Hong Kong investors the opportunity to have direct access to the Mainland capital market. Currently, the yields of bonds in the Mainland market are higher than similar securities in the offshore market. In addition, as inflation starts to moderate, reserve requirement ratios for banks as well as interest rates may be lowered, offering an ideal opportunity for bond investments. Our seasoned investment team will strive to seize every investment opportunity to achieve the best returns for our unit holders,” he says.

Sheldon Gao, president of CUAM (HK), notes that the company may apply for an additional allocation for the existing fund or to launch another RQFII product if the RQFII scheme proves to be a success. 

CUAM (HK) will face competition from Da Cheng, Hai Tong, and Guotai Junan – all three recently unveiled details of the launches of their own RQFII products.