CIMB-Principal launch China fund in Malaysia

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Kuala Lumpur-based CIMB-Principal Asset Management has launched Malaysia’s first China fund that uses renminbi qualified foreign institutional investor (RQFII) quota.

CIMB-Principal launch China fund in Malaysia

The fund, the CIMB-Principal China Direct Opportunities Fund, is also the first fund in Malaysia that directly invests in China’s onshore equities market, according to a statement from the firm.

The RQFII scheme allows foreign institutional investors to invest in onshore Chinese assets. CIMB-Principal AM is so far the only Malaysian firm to be awarded an RQFII quota by China’s State Administration of Foreign Exchange (SAFE), according to the regulator’s records. The firm received its quota in May last year.

Even before the fund launch, Malaysian investors already had the opportunity to invest in China’s A-share market through feeder funds. They include Amfunds Management’s AmChina A-Shares Fund, which feeds into the Allianz China A-Shares Fund and Affin Hwang Asset Management’s China Growth Fund, which feeds into Blackrock’s China Fund that invests in both offshore and onshore Chinese equities, according to their fund factsheets.

CIMB-Principal AM’s China A-share fund invests at least 70% of its assets in small- and mid-cap companies listed in both the Shanghai and Shenzhen Stock Exchanges, according to the statement. It is co-managed by China-based CCB Principal Asset Management, which is the joint venture between US-based Principal Financial and China Construction Bank.

CIMB-Principal is also a joint venture firm between Principal Financial and Malaysia’s CIMB Group.

“There is no better time to participate in China’s new economy – comprising industries such as information technology, green technology, healthcare and consumer discretionary, which are set to propel China’s next growth trajectory,” Munirah Khairuddin, CIMB-Principal AM’s CEO, said in the statement.

Munirah is optimistic about the demand for the fund and expects that its assets will reach $100m within the first year of the fund’s launch.

CIMB Bank, which includes CIMB Private Banking, will have exclusive distributorship of the fund via its branches in Malaysia for the first three months from the fund’s launch, according to the the statement.

“The fund is a strong addition to CIMB Bank’s suite of investment products, enabling us to cater to an even wider range of investor profiles,” Gary Yong, regional head of wealth management at CIMB Bank, said in the statement.

In July last year, CIMB-Principal AM launched the country’s first China-focused multi-asset fund, which is a feeder fund that invests into the Hong Kong-domiciled HSBC China Multi Asset Income Fund. The HSBC fund invests in both onshore and offshore China equities and bonds.

For the full year 2017, CIMB-Principal AM was Malaysia’s fourth largest firm in terms of net new inflows, which amounted to $1.18bn, according to data from Cerulli Associates. As of the end of the year, it managed $8.79bn in assets.

 

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