Aberdeen, an Asian equities specialist, said its primary intention in seeking the QFII licence from the China Securities Regulatory Commission was for investing in local fixed income securities.
The fund manager said its Singapore-based Asian fixed income team, which manages US$5bn, was now awaiting further approval from the State Administration of Foreign Exchange (SAFE), for a quota of up to US$200m for local investment.
It noted that while Chinese currency markets were accessible to global investors through derivatives “this is not always the best way of taking advantage of the investment opportunities over the longer term,” adding: “Having a quota to invest onshore clearly allows the investor to take a direct view on the underlying bonds and equities themselves and not just the Yuan.”
Aberdeen explained that the regional bond market, excluding Japan, now exceeded 10 countries and that China’s was the largest, comprising some 15% of the Iboxx Asia ex-Japan local currency index.
Despite its reputation as an equities manager, the company said it was “cautious” about investing in local equities.
It explained: “Aside from a handful of dual listed H and mainland A share stocks, where A shares may be cheaper, we do not see immediate buying opportunities because of longstanding governance and quality concerns. Thus we will only use any quota for specialist Chinese mandates and their focus won’t change.”
