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.
VisionGain has been founded by Tina So and Ye Xiang, who have experience in Hong Kong and mainland investment firms and regulatory bodies.
The strategic partner will not only provide capital, but also offer on-the-ground research and access to corporate connections.
So was most recently managing director and CIO at BoC International Investment Managers in Shanghai (the joint venture between the former Merrill Lynch Investment Managers, now BlackRock, and Bank of China International). Prior to that she served as director of investment products at the Hong Kong Securities & Futures Commission, which she joined after running SchrodersÆ investment team in Hong Kong.
Ye also worked at BoCI as executive director and consultant, but has spent more time in government: at the Hong Kong SFC as director of China affairs, at the Hong Kong Monetary Authority as a senior policy analyst, and section chief at the PeopleÆs Bank of China in the mid-1990s.
The team also includes Christine Chow, an investment manager at Schroders in Asia for six years and an investment consultant at Hewitt in London. Two more people will join early next year, including a research analyst from an American investment bank and a derivatives trader, and the team is looking for a sixth senior member.
The VisionGain China Absolute Return Fund will be the companyÆs first, to be launched in January with an asset size target of $50-100 million, including seed capital from the mainland strategic investor and So and YeÆs own money. It is an absolute-return strategy denominated in US dollars.
Strategies include long/short, A/H share arbitrage, event-driven plays and private equity/pre-IPO opportunities.
While the operations will be similar to a long/short hedge fund, So explains the strategy is long-biased and based on interpreting BeijingÆs policymaking, with less emphasis on trading and short-term moves. ôOur investment approach is about integrating our understanding of the Chinese policymaking process with quantitative stock-picking factors,ö she says.
The evolving integration of ChinaÆs capital market with the rest of the world is accelerating liberalisation and reform of the entire financial system, So argues. For example, the qualified domestic institutional investor (QDII) program has been necessary to alleviate pressure from the growing savings pool. It sets a path for allowing the A-share market to develop along international lines.
Chinese domestic policy is increasingly impacting other countries in the region û just look at how Hong KongÆs stock market moved dramatically on rumours about a ôthrough-trainö of direct investment in Tianjin. For an investor, taking this policy into account is not something that can be modelled or number-crunched. ôIt has to be analysed,ö So says, noting that looking at companiesÆ financial results is not enough if an investor lacks an understanding of Chinese reform and opening. ôCombining these represents the total opportunity.ö
Some themes the new fund is likely to pursue include, domestically, expected reform in aerospace and defence, which will create M&A/event-driven opportunities; and mining. Internationally there are many potential China plays, from greater integration with Taiwanese companies to French nuclear contractors.
Lehman Brothers is prime broker to the debut fund. So explains the firmÆs relationships with mainland brokers allows for plenty of QFII quota the fund can access, and says LehmanÆs service has been excellent. HSBC is fund administrator, thanks to its state-of-the-art service platform and its flexibility in areas such as side pockets. Deacons is the law firm and PricewaterhouseCoopers the auditor.
Mega players Nippon Life and Dai-ichi Life are looking for opportunities in higher-yield single-A US corporate bonds, which offer more appealing yields than stagnant domestic offerings.
The “lower for longer” monetary policy and stimulus packages, coupled with the rolling out of vaccine programmes favorably support real estate investing in the region, with offices and data centres presenting forward-looking opportunities.
As US fixed income default rates rose and yields fell during the pandemic, are Asian bonds, which have had more stable yields through 2020, looking more attractive?
Insto roundup: Norway's Oil Fund praises China governance efforts; NPS commits $100m to taxi-hailing app
Norway's Oil Fund welcome Chinese proposals improving transparency and shareholder protection; HK's MPF assets surge 35% year on year; Korea's NPS commits $100m to TPG consortium to invest in taxi-hailing app; Poba commits W270bn to European property; Malaysia's EPF sees investment income rise 59% year-on-year in first quarter, and more.