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Nikko Asset Management receives RQFII license

Nikko Asset Management Asia has received a renminbi qualified foreign institutional investor (RQFII) license from the China Securities Regulatory Commission (CSRC).
Fund Selector Asia

The asset manager is the latest in a spate of companies to be granted a licence by the CSRC, including Singapore government owned Fullerton, which announced it had received a licence earlier this week.

Phillip Yeo, head of product development and management at Nikko Asset Management Asia, said the firm is aiming for US$200m in its maiden RQFII product and is targeting US$800m to US$1b across three-five products over the next three to five years.

Eleanor Seet, president of Nikko Asset Management Asia said: “The attainment of the RQFII license is a strong affirmation of our strength in the RMB bond market of which we were an early entrant in 2010.

“This strategic development allows Nikko AM to provide retail investors with access to the domestic capital markets in China and expand our repertoire of innovative investment solutions.”

To start with the asset manager plans to focus on tapping the opportunities in China onshore bonds for the next six to 12 months.

“The Chinese onshore bond market is the largest in Asia, at about US$4trillion of which less than 5% are held by foreign investors. This is larger than the entire bond market in the rest of Asia (ex-Japan) added up together,” Yeo elaborated.

“With RQFII, the average Singaporean will now be able to buy retail unit trusts investing into a portfolio of China on-shore bonds and/or China A-shares.  It is a good development. To complete the product offering, we will also be looking at A shares and China balanced mandates subsequently.”

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.

In order to tap the demand for RMB and related products, Hong Kong-based Haitong Securities set up its first company in Singapore. UK-based Ashmore Group became the first fund manager outside of Hong Kong to receive such a licence. Recently in April, BlackRock received a RQFII license for its North Asia subsidiary.

Fund houses are also trying to tap the demand for RMB with J.P. Morgan Asset Management recently announcing a new RMB share class to its multi-income fund and equity fund while Hong Kong-based HFT Investment Management announced the launch of a RMB money market fund.

Among other measures that may boost the currency are the ongoing work with Hong Kong for a mutual stock market access programme and also “mutual recognition” of funds between mainland China and Hong Kong.

Part of the Mark Allen Group.