The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
ôThe reaction from investors originally was to question why they would want to invest overseas,ö says Astrid Gehnel-Ceelen, head of QDII at Fortis Investments. ôBecause they saw a local share market that was thriving, denominated in a currency that was strengthening.ö
Of course their concerns turned out to be true. The currency has continued to get stronger and overseas markets have swooned. (So has ChinaÆs of course, but those same investors might conveniently overlook that.)
QDII structurers are marketing into a primitive demographic, investor-wise, and one panellist pointed out that the grasp of investment basics can be unsophisticated. For example, investors are not aware of differentiated notional values, and think that a product that trades below RMB1 ($0.14) is cheaper and better valued than a completely different one from another company that trades at, say, RMB5 ($0.71). Consequently, QDII product offerors will often split the value of their product when it reaches a certain level, so that investors will be encouraged by what ostensibly appears to be a cheap and good value product.
ôThe product is not in a good position,ö says Sheldon Gao of Schroders. ôPeople have the licenses in place, but right now they are in no hurry to issue products.ö
Chinese domestic banks and international banks based in China account for $16 billion of the $45 billion scheme. The remainder is allocated to securities companies, fund managers, insurance companies and trust companies. ôTrust companies can already sell local hedge funds to Chinese investors,ö adds Sheldon Gao. ôSo in that respect they are the most flexible of the scheme participants.ö
At present 30%-40% of products focus on Hong Kong and Gehnel-Ceelen expects more evolution in the product classes, towards more guaranteed products and more hedge funds. Will that be a solution though? Hedge funds are investments for sophisticated investors. Allowing Chinese investors to make a quantum leap into, say, international multi-strategy funds when they are still learning about basic equity and fixed income capital markets looks indelicate.
QDII has moved on from its original remit of fixed income products and now embraces equity and mutual fund products. Approved countries currently number Hong Kong, Singapore, UK, Japan, Luxembourg and the US. More are expected to follow.
Sunsuper and QSuper appoints CIO for combined entity; State Street appoints heads of HK and Taiwan; Nothern Trust rebuilds Apac team; Manulife IM names emerging markets fixed income CIO; RBC Wealth Management hires four into HK; Lombard Odier hires two senior equity managers; Allianz Global Investors appoints Asia hand as equity CIO; and more.
Investors from China and the US are expected to continue buying assets in each other’s markets despite the blacklist of Chinese firms with military and surveillance ties.
Stronger government actions are needed to meet the Paris Agreement goal of limiting global temperature rise to 1.5 degrees, investors such as Hesta and CDPQ signed in a statement.
AsianInvestor explains why we chose the winners of the second half of our 2021 fund manager winners, by major local markets.