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CCB Principal launches UK equities QDII product

Despite Brexit woes, the UK has become the latest choice for China's qualified domestic institutional investors (QDII).

CCB Principal Asset Management (AM) has launched the CCB Principal FTSE 100 Index QDII Fund, which is the first public offering fund that invests in the UK, according to a Mainland China publication.

In June this year, CCB Principal AM applied to the China Securities Regulatory Commission to change its Global Resources Mix Fund, which invested in overseas markets globally, to the CCB Principal FTSE 100 Index QDII Fund, with a mandate to invest in UK equities. These include FTSE 100 index constituent stocks, alternative constituent stocks, and products that track the same underlying index, the local media noted.

FSA contacted CCB Principal AM but the firm was unable to provide any further details in time for publication.

The QDII scheme allows domestic fund managers to raise onshore money for offshore investments, within allocated quotas.

During the first half of this year, the QDII scheme has seen net inflows of RMB 189m ($26.6m), according to Morningstar. Under the scheme, global bond funds had the highest net inflows of RMB 3.5bn among all QDII categories, FSA previously reported.

Popular investment mandates have recently included equity markets in India, Vietnam and Japan.

Established in September 2005, CCB Principal AM is a joint venture between China Construction Bank, US-based Principal Financial Group and China Huadian Capital Holdings, with shares of 65%, 25% and 10% respectively.

As of the end of 2018, the firm’s total assets under management (AUM) exceeded RMB 1.6trn, with public offerings of RMB 633.1bn, non-public offerings of RMB 464bn, and subsidiaries’ AUM of RMB 520.3bn, according to the firm’s website.

Xianzhou Jiang, vice chairman and CEO of China Construction Bank (Asia) told FSA earlier that “the path to success in China for a foreign fund management firm is the joint venture with a Chinese firm.”

“If it’s only a foreign wholly-owned company, I believe it has a relatively low chance of success in China at this stage,” Jiang said.

He added that “the China market is very different from developed markets in the US and Europe, hence an approach that is successful in the developed countries might not be applied to China. A joint venture with a Chinese partner can bring out the best side of each firm.”

Principal Financial Group does not yet own a wholly foreign owned enterprise in China.

FTSE 100 Index’s three years’ cumulative performance


Source: FE. Three years’ cumulative performance in US dollars.



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