RQFII managers get record quota, plan products

RQFII fund managers can now offer a more diverse range of products, including segregated accounts, as Chinese authorities ramp up quota handouts.
RQFII managers get record quota, plan products

With renminbi-qualified institutional investor (RQFII) quota issuance hitting a monthly record last month and China’s securities regulator relaxing rules on investments earlier this year, the RQFII bandwagon is gaining momentum.

China's State Administration of Foreign Exchange handed out Rmb15.6 billion ($2.5 billion) to 14 RQFIIs in May, the most awarded in a single month since the programme’s launch in December 2011. This follows Safe starting the next phase of RQFII – involving a total quota of Rmb200 billion and dubbed RQFII 3 – in early May.

Moreover, asset managers can now launch Rmb-denominated exchanged-traded funds and segregated accounts. This is a welcome development, says Nathan Lin, general manager at GF International Investment. The looser rules have helped the firm broaden its product line, he tells AsianInvestor.

GF obtained Rmb800 million of RQFII quota in May and is in the process of deploying the money into segregated accounts and equity-centric funds.

“We are now in talks with investors to start our segregated account business,” says Lin. “We currently have an RQFII bond fund [and] we plan to launch an equity-centric fund with the fresh RQFII quota. After that, we can offer a whole range of products to investors.”

He declined to specify how the Rmb800 million will be divided.

In addition to segregated accounts, the ETF space is becoming more diversified after Hong Kong’s Securities and Futures Commission (SFC) ruled in February that securities firms can launch and manage RQFII ETFs in-house, provided the firms in question hire an adviser. Previously only asset managers with parent companies experienced in running ETFs could launch them.

Market sources tell AsianInvestor that Haitong International, which received Rmb2 billion in RQFII quota last month, will become the first securities firm to launch an Rmb-domiciled ETF to track the CSI300 China Securities Index. Sources say a launch date has not been set as the ETF is still pending SFC approval.

Harvest Global Investments, the Hong Kong arm of Harvest Fund Management, received Rmb2 billion and will on Thursday launch an ETF to track the MSCI A50. Bosera Asset Management, which also received Rmb2 billion, is reportedly preparing to launch an ETF referencing the FTSE A50, but declined to comment.

China Asset Management also received extra RQFII quota in May to the tune of Rmb2 billion for its CSI300 ETF while GuoYuan Asset Management and Essence International each won Rmb1 billion. CCB International Asset Management, China Everbright, GF Asset Management, HFT Investment Management, HuaAn Funds and Huatai Financial Holdings each collected Rmb800 million and E Fund received Rmb100 million.

From December 2011 through the end of May, Safe has awarded some Rmb91.9 billion in quota to 27 RQFII holders.


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