Lion Global launches RQFII funds to tap A-share market

The asset manager has used its Rmb1 billion RQFII quota to launch three China-focused funds in Singapore. The funds focus on either A shares, fixed income, or a combination of the two.
Lion Global launches RQFII funds to tap A-share market

Singapore-based asset manager Lion Global Investors will today launch RQFII unit trust funds offering access to China’s equity and fixed income markets.

It comes just months after the firm was awarded a Rmb1 billion ($161 million) quota under the renminbi qualified foreign institutional investor (RQFII) scheme.

Lion GI was the sixth Singapore fund house to be awarded an RQFII licence in October last year after the city-state was handed Rmb50 billion in quota in 2013. While it eventually won Rmb1 billion, Gerard Lee, Lion GI's chief executive and CIO, originally told AsianInvestor last October that it intended to apply for a quota worth between Rmb200 million and Rmb500 million from the State Administration of Foreign Exchange.

The three funds launched this week in Singapore are an equity fund, a bond fund, and a fund which combines the two.

The bond fund invests in fixed income instruments, while the equity fund invests in A shares focused on consumption, ageing and ‘going green’.

Gerard Lee, CEO and CIO at Lion GI, commented: “Notwithstanding that China A shares have been rallying over the last six months, they are still trading at a discount to pre-global-financial-crisis levels while most other markets have matched or exceeded their pre-GFC levels.

“Although the anti-corruption drive and economic reform by the current administration continue to be headwinds to the markets, we think it’s a good time for investors to enter the Chinese onshore markets as valuations are reasonable.”

These unit trust funds are targeted at distribution channels via consumer banks and financial advisors to retail and mass affluent investors, and also at institutional investors.

Lion Global has been managing an A-share portfolio using OCBC’s qualified foreign institutional investor (QFII) quota since 2010. It was granted its own  licence in May 2012 and received a $50 million quota in 2013, when it took on another A-share mandate for an institution in Singapore.

The RQFII programme was introduced in December 2011 when Hong Kong was awarded Rmb20 billion in quota. That was expanded to Rmb70 billion in June 2012 and Rmb270 billion in March last year. However, the city reached the limit in its quota last year and it has not yet been given additional quota.

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