BNP Paribas Investment Partners has this month applied for a renminbi qualified foreign institutional investor licence in Hong Kong, with a view to launching a hybrid bond fund under the scheme. It is also likely to apply for an RQFII licence in SIngapore.
The French asset manager made the application in early March and hopes to receive the licence in two to three months. It is expected to initially apply for Rmb1 billion ($161 million) in quota.
BNPP IP is already a QFII manager, having been granted $500 million in official quota, which has grown to $3 billion in exposure.
The firm now aims to launch a product that invests in both onshore and offshore renminbi bonds. If it sees demand for a purely onshore RMB fund, the firm will seek further quota, says Vincent Camerlynck, Asia-Pacific chief executive.
BNPP IP also already has a stake in HFT Investment Management, a joint venture with China’s Haitong Securities that has launched two renminbi bond funds, the China RMB Fixed Income Fund in January 2012 and the China High Yield Bond Fund late last year. The two products between them have assets under management of Rmb1.3 billion.
This presence gives BNPP IP a good head start, Camerlynck tells AsianInvestor.
The firm is also likely to apply for an RQFII licence in Singapore down the line, now that the local regulator has opened to doors to the opportunity. There are also said to be other European asset managers making similar moves in the Lion City.
BNPP IP has investment staff in both Hong Kong and Singapore, focusing on equities and fixed income, respectively, in the two markets.
“I don’t see it as being an issue to first apply in HK then do so elsewhere as and when we believe it’s the right thing to do,” he notes. “I disagree with people who think you shouldn’t apply for both.”
Asked about the eagerly awaited China-Hong Kong mutual recognition agreement (MRA), he says BNPP IP does not have Hong Kong-domiciled funds, nor does it have any current plans to launch any. But there is a working group in place looking at the options.
Rather, it relies on access to mainland clients via the qualified domestic institutional investor (QDII) scheme. Camerlynck admits demand for QDII in general has not met expectations, but argues that there is a lot of room for growth, and that the MRA will help to increase the use of the existing QDII quota.
“Even without domestic funds, we feel we can contribute to the development of the [Chinese] market,” he adds. “What is missing is the demand that has to be received from investors.”
Elsewhere in Asia Pacific, BNPP IP is better represented than most international fund houses in terms of a local presence; it has investment and sales staff in Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Singapore and Taiwan.
However, Camerlynck says the firm is “probably one of the most under-recognised emerging-market players today”. Hence, before it looks to further expand, the first priority is to do a better job of conveying the emerging market capabilities it already has in the region and across the globe.