HONG KONG May 19 Chinese asset management firm E Fund Management (Hong Kong) said it has tied up with London-based ETF Securities to launch an exchange traded fund (ETF) to list on three European exchanges.
The ETF allows European investors to access China's market while being another incremental step to expanding the yuan's global footprint.
Tracking the MSCI China A Index and with a quota of 2 billion yuan ($320.9 million), the ETF will be listed on the London Stock Exchange, Deutsche Boerse and NYSE Euronext Amsterdam on Monday. It is the first such fund to list in three European stock exchanges simultaneously under the Renminbi Qualified Foreign Institutional Investor (RQFII) scheme.
The RQFII programme, launched in 2011, allows financial institutions to use offshore yuan to invest in the Chinese mainland's securities markets, including in stocks, bonds and money market instruments.
"Last month when we did roadshows in Europe, we found that many investors there were looking for opportunities in China," Tseng Ko, managing director at E Fund Management (Hong Kong), told Reuters in an interview.
"European investors held a positive attitude on China's market reform and opening up, though they also had concerns on issues like credit default and the export slowdown," Tseng said, adding the company planned to list this ETF in more countries.
China's economic activity showed across-the-board weakness in April, with data from output to investment and consumption all missing market expectations, sparking new calls for Beijing to ease policies to shore up growth.
E Fund is not alone in expanding its yuan business roadmap. China's Harvest Global Investments partnered with Deutsche Asset & Wealth Management in December and listed the first yuan ETF in the United States.
China's CSOP Asset Management also cooperated with London-based Source to launch RQFII ETFs in London and the United States in January.
China is stepping up efforts to reform its domestic capital markets and to promote its currency to global investors, in a bid to raise the status of the yuan in trade as the world's second-largest economy opens up its markets.
In addition to the 270 billion yuan RQFII quota that was granted to Hong Kong, Beijing also granted an 80 billion yuan quota to France in March, following the 80 billion yuan quota given to the UK and 50 billion yuan to Singapore.
As of the end of April, a 215.6 billion yuan quota had been approved in Hong Kong, according to statistics from the State Administration of Foreign Exchange (SAFE).
Tseng said the MSCI China A Index will be appealing to European investors as it provides broader company coverage and more diversified sector coverage than other A-share indices which have a high concentration in a few sectors and stocks.
"Investors in the U.S. and Europe like the MSCI China index because when they do asset allocation in the region, they do not want to concentrate too much on a specific sector or stock," said Tseng.
($1 = 6.2334 yuan) (Editing by Jacqueline Wong)