The Hong Kong subsidiary of China Southern Asset Management, CSOP, is among six geographically spread international businesses to be awarded fresh QFII licences.
The other recipients are UBS Global Asset Management (Hong Kong); US fixed income house Pimco; East Capital AB from Sweden; First Securities Investment Trust from Taiwan; and EJS Investment Management from Switzerland.
The announcements were posted on the China Securities Regulatory Commission (CSRC) website on Wednesday night.
Pending regulatory approval of a QFII quota, CSOP Asset Management is understood to be planning to launch two equity-focused funds, one domiciled in Europe and one in Asia.
It is understood that the Chinese fund house has already secured a number of potential clients for its future QFII fund from Europe, including pension funds and banks.
A source estimates initial demand for the product at $200-$300 million – perhaps an indication of the sort of size the firm is targeting.
However, the source adds that CSOP has no immediate plans to apply to trade stock index futures as most of the firm's clients are interested in long-only strategy.
As reported by AsianInvestor last month, QFII participants are now allowed to trade stock index futures, enabling fund managers to use the type of hedge they employ in international markets.
However, they are not allowed to use index futures as speculative or arbitrage purposes or as a way to sell derivatives offshore.
Late in January, five QFII holders were permitted to start trading futures on the CSI300 index.
CSOP is one of the largest renminbi-denominated qualified foreign institutional investors (RQFII) with a quota of Rmb16.1 billion. Currently it runs the CSOP A50 ETF and the Shen Zhou RMB fund which is a fixed income product.
Meanwhile, this represents the third QFII licence that Swiss bank UBS has been handed for one of its businesses. UBS was the first foreign institution to be awarded a QFII licence along with Nomura Securities in May 2003. UBS Global Asset Management (Singapore) gained a QFII permit in 2006.
By the end of January CSRC had granted a total of 213 QFII licences, while $39.8 billion in quotas had been awarded to 177 licence holders by the State Administration of Foreign Exchange.