Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
Qualified domestic institutional investor (QDII) funds were also in negative territory, but managed to outperform equity funds in China by posting an average loss of 3.71%. That brings the QDII fundsÆ average loss for the first seven months of this year to 24.94%. The QDII programme allows institutional investors to move funds overseas as part of the liberalisation of China's capital account.
Qualified foreign institutional investor (QFII) funds performed worse, posting an average loss of 13.80%. Average losses for the January to August period reached 50.27%.
The total net assets of the 19 QFII funds tracked by Lipper last month slid to $7.961 billion from $7.374 billion in July.
The six QFII institutions approved in August included Ace INA International Holdings, Caisse de depot et placement du Quebec, Harvard University, Samsung Investment Trust Management, AllianceBernstein, and Overseas-Chinese Banking Corporation, according to Lipper. These bring to 65 the total number of investors in China's QFII scheme. Individual quotas are typically around $100 million to $200 million, and quotas issued so far total roughly $11 billion.
China launched the QFII programme in mid-2003 to allow approved foreign institutions to trade A-shares and bonds on the Shanghai and Shenzhen exchanges. The programme was part of the governmentÆs efforts to open ChinaÆs capital market and ease controls on the capital account, under which the renminbi isnÆt fully convertible.
Investors in China are focusing on post-Olympics economic and policy reforms. Many find comfort that ChinaÆs inflation continues to ease and oil and commodity prices are sliding.
ôWhile the balance of policy concerns continues to shift towards growth from inflation, the authorities are likely to keep the past monetary policy tightening in place. There may be a massive fiscal stimulus and broad monetary policy easing in the future,ö says Xav Feng, head of research for Taiwan and China.
ôAfter the glory of the Olympic Games, all the Olympics-related restrictions will be liberalised and activity should rebound in the second half of the year. When the fine-tuning measures begin to work, ChinaÆs economy could still be growing at a fast pace, despite the fading global economy,ö he adds.
Average performance of fund groups in China in August:
Bond CNY +0.42%
Money Market CNY +0.25%
Mixed Asset Other Conservative -2.65%
Target Maturity -4.48%
Mixed Asset CNY Flexible -9.55%
Mixed Asset CNY Balanced -9.66%
Mixed Asset CNY Aggressive -10.90%
Equity China -12.21%
Top performing QFII funds in August:
iShares FTSE/Xinhua A50 China Tracker -9.34%
Morgan Stanley China A Share Fund -9.46%
JF China Pioneer A-Share -11.46%
AMP Capital China Growth -13.09%
Hang Seng China A-Share Focus -13.16%
Hang Seng China A-Share Focus A1 -13.27%
ING China A Share Fund P Class -13.54%
Nikko China A Share Fund 2 -14.15%
Nikko AM China A Stock Fund -14.24%
W.I.S.E. - CSI 300 China Tracker -14.37%
ABN AMRO China A Share Fund -14.42%
PCA China Dragon A Share Equity A-1 Class C -18.45%
APS China A Share -20.50%
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