Aberdeen AM said it has applied for an RMB600m ($98m) investment quota and expects the actual sum to be confirmed by the State Administration of Foreign Exchange in November. The investment manager intends to apply for an additional quota once 80% of the allocation is invested.
The China A-share fund will be marketed globally to institutions such as private banks and discretionary fund managers, starting in Europe.
The launch of an A-share fund represents a gradual shift in the company’s view of Chinese equities, the fund house said.
Since 1997, Aberdeen has been managing a China equity fund, which has a heavy weighting in Hong Kong and other non-mainland domiciled stocks.
The A-share market offers exposure to sectors that may not be accessible in the smaller H-share market. These include consumer, travel, healthcare and financial services, where state-owned enterprises are less dominant.
Hugh Young, Aberdeen Asset Management Asia managing director said: “Although China is a huge and exciting market, we are instinctively cautious and have shunned stocks that do not protect minorities or whose structures do not give investors proper legal ownership of the underlying assets.”
“In the past it has been tough to find quality companies we like. That has been changing gradually and we could now pull together a portfolio of 20-25 stocks with which we would be comfortable, and with low cross-over with our existing fund.”
The fund uses its QFII licence that it secured in July 2010 to invest in both onshore domestic fixed income securities and equities.
As of June, Aberdeen had $551.4bn in assets under management on behalf of institutional and private investors. Of this, Asia accounted for $109.9bn.
Recent RQFII developements
Many asset managers are seeking to tap the demand for RMB products by launching new funds or introducing new share classes following the Chinese government’s measures to take the RQFII pilot programme out of Hong Kong to Singapore, the UK, Germany and South Korea.
Ashmore, the first fund house to get the RQFII access outside of Hong Kong, unveiled three China-focussed funds early September.
HSBC Global Asset Management and Nikko Asset Management have recently launched their China onshore fixed income funds while JP Morgan Asset Management offered its China A-share fund in August. Singapore’s Fullerton Fund Management has also secured a similar license.
BlackRock was recently granted an RQFII license for its North Asia as well UK arm, while BNP Paribas was the latest, obtaining the RQFII permit for its French unit.
