Posted inRegulation

Fullerton gets RQFII nod to invest in China market

Singapore-based Fullerton Fund Management has received a license to invest in China’s domestic securities market.
Fund Selector Asia

The wholly owned subsidiary of Singapore state investor Temasek Holdings, said it has been accorded the RMB qualified foreign institutional investors (RQFII) status from the China Securities Regulatory Commission.

The RQFII scheme allows international investors to tap the large pools of offshore RMB funds for more “efficient” access to China’s onshore capital markets.

The license also provides Fullerton with flexibility in product development and structuring solutions that meet the demands of clients and the market, the company said.

Speaking on possible product rollouts, Manraj Sekhon, chief executive and chief investment officer said: “We intend to utilise our RQFII quota for a China A equities fund and an RMB bond fund. Both funds will be available on Fullerton’s UCITS platform some time in the third quarter of this year.”

Fullerton said it expects the RQFII investment quota to be “significant” to meet the demand from a broad cross section of investors, who are looking to make longer term allocations to China.

Fullerton joins the ranks of other asset managers such as Nikko Asset Management in Singapore and the UK’s Ashmore who recently received the license outside of Hong Kong to tap into China’s onshore securities market.

Fullerton has an office in Shanghai, which is responsible for China A equities research and the firm currently manages onshore RMB equity strategies, as well as onshore and offshore RMB fixed income strategies.

In addition to its RQFII status, Fullerton also holds a qualified foreign institutional investor (QFII) license, which it received in May 2012.

Manraj Sekhon, chief executive and chief investment officer said: “China’s long-term investment potential is undeniable. The government’s emphasis on reform and rebalancing the Chinese economy will position China for more sustainable growth.

“As the country continues to liberalise its markets and capital account, we expect international demand for RMB-denominated assets to increase. Having an RQFII license will provide unprecedented opportunities to participate in China’s growth.”

The RQFII scheme eases the repatriation of funds, with daily liquidity, as well as more flexible investment guidelines that allow investors to allocate across equities and fixed income.

China is bringing in measures to internationalise the RMB, taking the pilot RQFII programme beyond Hong Kong to markets such as London, Singapore, and Taiwan. In October, China allocated RMB80bn ($12.82bn, £7.6bn) for London-based firms and RMB50bn for Singapore-based organisations.

Fullerton said the RQFII application was facilitated by HSBC China, which will also provide custodian services for company’s RQFII products.

Part of the Bonhill Group.