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Print articleSubmission to IBA Committee I Newsletter: Update on China
October, 2007 - Taylor Hui
With China’s accession to WTO in December 2001, China presents enormous opportunities for the international asset management industry, as the domestic financial market and players develop increasing sophistication. The financial regulators in China are pushing ahead with financial market reforms and regulations, across the equity and bond markets, over banks, insurance companies, securities companies, securities investment fund management companies, trust investment companies and other financial institutions. The Qualified Foreign Institutional Investors Scheme (“QFII”) was introduced since 2002 and has attracted much interest and foreign investments in A-shares of domestic listed companies and bond market. All of the US10 billion investment quota has now been used up.
On the outbound investments from China, the much anticipated Qualified Domestic Institutional Investors Scheme (“QDII”) was introduced in April 2006. However, the QDII scheme is less successful in that it was reported that only less than 5% of the US$14 billion quota granted has been invested. Chinese domestic investors are hesitant to invest offshore through the QDII scheme due to the anticipated appreciation of Chinese currency Renminbi (“RMB”) and restrictive investment scope of QDII products.
In the institutional investors space, Chinese insurance companies and the National Social Security Fund, the national pension fund, have now appointed international fund managers to invest their foreign currency funds globally.
Global players in the asset management industry may seek opportunities in China by forming joint ventures in China. There are now 25 joint ventures since 2002 out of a total number of 59 fund management companies in China. For a newcomer to this market, the first step may be to establish a representative office in China or explore any possibility to benefit from the QDII scheme or mandates from Chinese institutional investors before establishing any actual presence in China...
For the full story please refer to http://www.deacons.com.hk/eng/knowledge/knowledge_297.htm
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On the outbound investments from China, the much anticipated Qualified Domestic Institutional Investors Scheme (“QDII”) was introduced in April 2006. However, the QDII scheme is less successful in that it was reported that only less than 5% of the US$14 billion quota granted has been invested. Chinese domestic investors are hesitant to invest offshore through the QDII scheme due to the anticipated appreciation of Chinese currency Renminbi (“RMB”) and restrictive investment scope of QDII products.
In the institutional investors space, Chinese insurance companies and the National Social Security Fund, the national pension fund, have now appointed international fund managers to invest their foreign currency funds globally.
Global players in the asset management industry may seek opportunities in China by forming joint ventures in China. There are now 25 joint ventures since 2002 out of a total number of 59 fund management companies in China. For a newcomer to this market, the first step may be to establish a representative office in China or explore any possibility to benefit from the QDII scheme or mandates from Chinese institutional investors before establishing any actual presence in China...
For the full story please refer to http://www.deacons.com.hk/eng/knowledge/knowledge_297.htm
Link to article
