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According to the firm, it has been granted permission by the China Banking Regulatory Commission (CBRC) to offer its services only to banks with qualified overseas wealth management services. The approval comes at a time when global custodians are vying for business under the recently launched Qualified Domestic Institutional Investor (QDII) scheme.
Under the QDII program, HSBC will offer an array of services to the select number of Chinese banks with overseas wealth management capabilities and licensing. The services will include the opening of domestic and overseas custodian accounts, the provision of foreign exchange, cash clearing, securities and cash settlement services. The bank will also offer its clients the ability to monitor the progress of investment activities of commercial banks to ensure they comply with regulations.
The announcement by HSBC signals that CBRC is may more willing than ever before to accept the role in the QDII program to be played by foreign custodians, most of which have a presence in China.
Since the decision in mid-April by the PeopleÆs Bank of China (PBOC) to launch the long-awaited QDII scheme, custodian banks have come to the forefront of offshore investing, with the PBOC demanding that offshore custody services be required for Chinese institutions under the international investing program.
From 17 April, regulators signaled an expanded role to be played by custody banks in the market. Mainland commercial banks conducting offshore client wealth management business are now required to select another domestic commercial bank with CBRC-approved custodian business qualification as a custodian, in regard to all assets to be used for offshore investments. On the flipside, domestic custodian banks are required to set up settlement and securities custodian accounts with an offshore custodian.
Outside of its recent approval win, HSBC also conducts several other custody services on the Mainland. It provides custody and clearing services to foreign institutional investors in ChinaÆs B-share market and to Qualified Foreign Institutional Investors (QFIIs) in the countryÆs A-Share market.
Aside from this latest announcement, HSBC has also been licensed by the CBRC to provide custodian services to Chinese insurance companies for domestic and offshore investments, which again follows the recent liberalization under new regulations.
The AU$85 billion ($61.6 billion) Australian super fund has some exposure to indebted property developer Evergrande. Meanwhile, China’s construction finance is part of its core strategy in real estate.
Investors are seeing the risks, but also the opportunities of the logistics sector. Warehousing their fears for the moment, they can see it's a good conduit to high-growth assets.
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SGX’s new framework for Spacs will likely provide investors with a much-needed channel for direct deals, but the verdict is still out on whether it will bring liquidity to the bourse.