Principal AM launches Greater Bay fund

Asset Class in Focus

The Malaysia fund manager is offering a product to domestic investors that focuses on China and HK companies likely to benefit from the development of China’s Greater Bay Area.

The Principal Greater Bay Fund aims to generate income and achieve capital appreciation over the medium- to long-term, through holdings of China A- and H-shares focusing on large- and mid-cap stocks across a range of sectors including consumer goods and services, financials and technology, according to a press statement.

Principal Asset Management, which has AUM of  $13.75bn, is a joint venture between Principal Financial Group and CIMB Group, one of Southeast Asia’s main banking groups, according to its website.

CIMB will distribute the Greater Bay Fund through its domestic retail branches.

The theme of the fund is predicated on the investment potential of the region centred in nine key cities in the south China province of Guangdong, and the special administrative regions of Hong Kong and Macau.

The Outline Development Plan, unveiled  by the Chinese government in February this year, set out proposals to improve connectivity and co-operation within the region, creating a high-end manufacturing and innovation hub, while also using the project as a test bed for further opening up the mainland economy.

With a population of around 70 million and GDP of $1.6trn, the Greater Bay Area (GBA) is larger than some G20 countries in terms of economic output, according to Howard Lee, deputy chief executive of the Hong Kong Monetary Authority in a keynote speech at the HKIFA annual conference on 1 November.

The development plan has implications for a range of sectors, including financial services, logistics and technology companies, and should also boost the internationalisation of the renminbi.

China intends to widen the scope of cross-boundary investment in the GBA and steadily expand the channels for mainland and Hong Kong residents to invest in financial products in each other’s market, according to the outline development plan.

At present, various cross-boundary programmes have been established between the mainland and Hong Kong,  including the Stock and Bond Connect programmes and the Hong Kong-China Mutual Fund Recognition scheme.

Recently, other Malaysian firms have provided China exposure to domestic investors. In June, RHB Group Asset Management’s introduced a fund to feed into Blackrock’s China bond product, and earlier in the same month, Kuala Lumpur-based Affin Hwang launched a locally-wrapped version of UBS Asset Management’s China A Opportunity Fund.

Foreign managers are also introducing products in Malaysia. BNPP AM plans a product push in Malaysia using the feeder fund route, and Schroders has set up a partnership with Maybank for domestic fund distribution.

 

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