HONG KONG Jan 9 Chinese asset management firm
CSOP and London-based Source announced on Thursday the launch of
the first renminbi qualified foreign institutional investor
(RQFII) exchange traded fund (ETF) listed in London, expanding
channels foreign investors access China's domestic capital
Offshore ETFs focused on the A-share market are among the
few options for foreigners to access mainland markets and they
have become popular in recent months because of anaemic growth
prospects in the West and a recovering Chinese economy.
The fund, available to retail and institutional
investors across Europe, will track FTSE China A50 Index to
allow investors to have exposure to the top 50 companies in
As a result of strong demand for the fund, initial orders of
1.42 billion yuan ($234.66 million) were received on January 3,
CSOP said. The total quota granted to the fund is 1.5 billion
"The launch of this RQFII ETF on the London Stock Exchange
underlines the UK's position as the western centre for offshore
RMB, and the UK's position as a global centre for asset
management," Sajid Javid, UK Financial Secretary to the Treasury
said in a statement.
The RQFII scheme, launched in 2011, allows financial
institutions to use offshore RMB to invest in the Chinese
mainland securities markets, including stocks, bonds, and money
ETFs offered under RQFII is preferred more by investors than
those launched under its older cousin - the Qualified Foreign
Institutional Investor (QFII) - started in 2002.
That is because the RQFII ETFs invest in all constituent
stocks with the same weight as those in the benchmark, compared
with the QFII ETFs, which use derivatives to gain exposure and
thus have higher counterparty risk and tracking error.
Chinese asset manager Harvest Global Investments partnered
with Deutsche Asset & Wealth Management to list the first
exchange-traded fund (ETF) in the United States in December. The
two firms are also considering a similar fund to be listed in
As of Dec. 25, a total of 157.5 billion yuan quota had been
approved under 52 RQFII licences, according to statistics from
China's State Administration of Foreign Exchange (SAFE).