As the Qualified Domestic Limited Partnership (QDLP) scheme expands in Hainan, foreign asset managers are turning their focus on product development and demand.
The path to foreign control of domestic Chinese fund businesses isn't smooth, as those now applying for majority share licences are finding out. The US trade war isn't helping either.
China has reportedly reopened the two schemes. This could mean Ucits funds are close to Bond Connect approval and that QDII is set to return, says Andy Seaman of Stratton Street.
Passive fund houses are likely to wait for direct access to China’s mutual fund market, but this entails risks, says a report to be released today by Standard Chartered and Z-Ben Advisors.
Shanghai has drafted eagerly awaited changes to its qualified domestic limited partnership scheme. Foreign asset managers are also hoping for clarity on Chinese mutual fund licences.
The Dutch asset manager will also add a third individual to its China equity research team. But it will need a new type of wholly foreign-owned entity if it is to run money onshore.
Programmes including mutual recognition, Asean CIS, QFII, RQFII and Stock Connect appear to have fallen in favour, while ARFP, QDII, QDLP and QDIE have gained popularity.
The fund house aims to launch a Ucits China bond fund, set up a wholly foreign-owned entity in Shanghai, register for mainland bond market access and gain a QDLP licence. And that's not all.
Foreign asset managers under the QDLP scheme may be deterred from setting up private fund businesses in China because of constraints on cross-border investing and fundraising.
At least 10 fund houses are seeking licences under the qualified domestic limited partnership cross-border investment scheme, which is increasingly being used for traditional mutual funds.
Shenzhen is believed to have handed out licences – but only $1 billion in extra quota – to another 30 fund houses under its QDIE cross-border alternative investment scheme.
UBS Asset Management plans to launch three or four products under the Shanghai QDLP scheme, amid rising interest from Chinese investors in foreign assets.