The offshore regulated product, the Robeco Chinese Equities Fund, also available in Hong Kong and Singapore, will no longer be distributed in Taiwan from 17 September, according to a notice issued by the fund’s master agent Nomura Asset Management Taiwan (Chinese only). New subscriptions for the fund ended on 17 August.
The notice said the fund’s plan to raise A-share exposure may surpass the 10% limit set by Taiwan’s regulator, triggering the delisting of the fund.
According to Morningstar, the Robeco fund holds 47 stocks and six of them are mainland-listed companies, which represented roughly 8.5% of assets at the end of June. The rest of the stocks in the portfolio are listed either in Hong Kong or New York.
The fund is managed by Victoria Mio, the firm’s chief investment officer for China. The fund has an AUM of €350m ($405.2m) and Taiwan investors accounted for 2.96% of the assets at the end of July, according to an investor document published by the master agent.
The fund’s A-share holdings
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Han’s Laser Technology Industry (1.99%) |
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Hangzhou Hik-Vision Digital Technology (1.74%) |
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China International Travel Service (1.43%) |
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Inner Mongolia Yili Industrial Group (1.23%) |
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Midea Group (1.11%) |
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Shanghai Fosun Pharmaceutical (1.03%) |
Source: Morningstar, at the end of June
MSCI and A-shares
Offshore funds sold in Taiwan can allocate a maximum of 10% of assets to China’s A-shares. The limit, previously 0.4%, was raised to 10% in July 2008.
Some exceptions to the limit are made for participants in Taiwan’s “Deep Cultivation Plan”, which aims to drive the development of the local fund industry by encouraging global fund houses to commit resources to their Taiwan operations.
The qualified foreign players in the scheme are allowed to raise A-shares weighting in a single portfolio to as much as 30%.
Schroders was approved for the 30% limit last year, according to local media.
Because MSCI began increasing the weighting of A-shares in several emerging market indices, Taiwan’s Financial Supervisory Commission plans to initiate a review on Chinese onshore equity restrictions by year-end, according to a local report, citing the regulator.
However, the weighting of China’s onshore stocks in the MSCI indices is only around 0.8%. Therefore, the regulator believes there will not be many China equity funds reaching the upper threshold and it is unlikely a spate of China equity funds will delist in Taiwan.
