Posted inAsset managers

Truvalue AM eyes overseas markets

The Shenzhen-based asset manager is keen to expand its investments in overseas markets using its qualified domestic institutional investor (QDII) licence.
An aerial view of Hong Kong-Zhuhai-Macao Bridge in Zhuhai, Guangdong Province of China. The Hong Kong–Zhuhai–Macau Bridge is a bridge–tunnel system, which consists of a series of three cable-stayed bridges and one undersea tunnel, as well as two artificial islands. The bridge was opened on 23 October 2018.

“Overseas capital is eager to get into the Chinese domestic market, while Chinese investors want exposure to foreign markets,” Huang Yuemin, director and deputy general manager of Truvalue Asset Management, told FSA

To meet that demand, Truvalue AM applied for the QDII licence a few years ago, and was granted the license in 2019.

Launched in 2006, the QDII programme allows some domestic institutions and fund managers to invest offshore within specific quotas.

Truvalue was granted a $100m QDII quota at the end of 2020, the State Administration of Foreign Exchange website shows. Huang said that quota has yet to be used up, and he has been given the impression that it will be easier for them to apply for new quotas in the future.

Truvalue launched its first QDII product fund on 30 June this year, and the RMB 664m ($103m) fund is mainly invested in Hong Kong-listed stocks, according to the China Securities Journal.

“We have been investing in Hong Kong stocks for a while through the Stock Connect (Shanghai-Hong Kong and Shenzhen-Hong Kong) schemes. In future, we want to invest more through the QDII scheme, to help our investors carrying out overseas asset allocation.”

Huang likes consumption companies, especially firms making food and beverages popular with young people, and also medical companies. Some “home-coming companies”- that is, US-listed Chinese firms seeking a secondary listing in Hong Kong — “are also promising”.

Domestic trends

As for the A-share market, Truvalue began “positioning itself for the growth of new energy vehicles four years ago, and [the strategy]  has paid off”. Pharmaceuticals, technology and new energy are also themes that the firm is paying attention to.

Huang said that although the pandemic has negatively impacted global economic growth, as well as the Chinese economy, China’s asset management industry has actually enjoyed some benefits.

“Investors have lowered their expectations in terms of investment returns,” he said. “Meanwhile, more investors are seeking professional investment advice, which means more clients for firms such as Truvalue.”

The pandemic has also accelerated “digital transformation”, with both institutional and retail investors requiring more and better digital delivery of financial services and products.

For instance, Ant Group (an Alibaba affiliate) has provided an open platform for asset management companies, such as Truvalue, to provide digital services, expand their client base and distribute funds.

“The high-level of digitalisation in investor engagement and fund sales is a signature of the Chinese asset management industry,” said Huang

Truvalue AM was founded in July 2014, and its controlling shareholder is First Capital Securities. Currently it manages RMB 870bn in assets, mostly for Chinese institutional investors.

Part of the Mark Allen Group.