China Universal tests the water in Taiwan

11 April 2014   Category: News, Asia, China, Global, Taiwan   By Asia Asset Management

China Universal Asset Management will become one of the first Mainland asset managers to access the Taiwan market following it joining hands with Standard Chartered Bank to distribute its RMB bond fund through an offshore banking unit (OBU) platform, according to a report from Shanghai Securities Journal on April 10.

The OBU initiative provides an alternative investment channel for Taiwan’s ballooning offshore RMB deposits, which topped 250 billion RMB (US$40 billion) as of the end of February 2014.  

Local Taiwanese financial institutions have yet to receive authorisation to apply for RQFII licences, even though the China Securities Regulatory Commission (CSRC) said in early 2013 that it would set aside 100 billion RMB (US$16 billion) in RQFII quotas for Taiwanese entities.

In late 2013, Taiwan’s Financial Supervisory Commission (FSC) relaxed restrictions on OBUs, which meant offshore fund managers could bring renminbi qualified foreign institutional investor (RQFII) products to Taiwan, which would allow their clients to invest directly into the PRC market.

As such, a number of Mainland asset managers, including China Asset Management Co (China AMC) and China Universal, are looking to tap into the Taiwan market by collaborating with lenders. In February, China AMC announced it was pairing up with Citibank to introduce an RQFII product to Taiwan.

China Universal told local media earlier this week that OBU RMB platforms are a significant help to promoting RMB internationalisation and enhancing cross-Strait financial activities.