Hong Kong and Shanghai Banking Corporation will sell to its Chinese high-net-worth clients funds that are offered by J.P. Morgan Asset Management’s Mainland unit under a scheme that allows foreign managers to raise money in Chinese currency to invest in alternative assets overseas.
The move makes HSBC the first foreign lender to participate in onshore distribution of investment plans related to the scheme, known as Qualified Domestic Limited Partnership (QDLP).
The distribution partnership with China International Fund Management (CIFM), which is 51%-owned by J.P. Morgan Asset Management, will help Chinese high-net-worth individuals invest in offshore and alternative assets, HSBC says in a statement on June 1.
“HSBC is actively participating in the opening of China’s financial markets and is investing to grow and lead in the emerging HNW space,” Richard Li, executive vice president and head of wealth and personal banking at HSBC China, says in the statement.
CIFM Chief Executive Officer Eddy Wong adds that the move deepens the company’s existing distribution partnership with HSBC China for funds under another scheme, known as Qualified Domestic Institutional Investors.
That scheme allows Chinese retail investors to invest in foreign bonds and stocks. HSBC China has been selling these CIFM funds since 2012.
As of April 2020, there were 40 QDLP funds offered by 28 managers – both foreign owned and joint ventures with Chinese firms – according to figures from the State Administration of Foreign Exchange, the supervisor of China’s foreign reserves.
CIFM had 151.5 billion RMB (US$21.2 billion) of total assets under management as of December 2019.
J.P. Morgan Asset Management is currently in the process of acquiring the 49% stake in CIFM held by its joint venture partner, state-owned Shanghai International Trust Co.