SG's China Fund Arm Approved to Launch QDII Fund
SHANGHAI (Reuters) - Societe General's (SOGN.PA) China fund business said it has won approval to launch a fund to mainly invest in overseas-listed China-related equities under China's Qualified Domestic Institutional Investor (QDII) scheme.
So far, 11 domestic fund houses have obtained QDII licenses, and four of them have launched the products under the scheme -- aimed at giving domestic residents more investment opportunities and to promote a better balance in China's international payments. [nSHA160956].
Shanghai-based Fortune SGAM Fund Management Co, which received a QDII license in August, said in a statement on Tuesday it had obtained permission for the launch from the China Securities Regulatory Commission.
The company did not mention the targeted size of the planned fund, but said it would be kicked off for sale soon.
Chinese fund management firms are allowed to raise a maximum of $4 billion for each of their QDII funds through initial public offers. The quota can be expanded to $5 billion through additional offers, industry officials say.
A Fortune SGAM official told Reuters the fund must be launched within six months, but the firm had not decided on the specific timing as it needs to monitor the overseas financial markets.
"As you know the overseas markets are not doing well so we are taking a wait-and-see attitude," the official said.
The existing QDII funds launched earlier this year by four Chinese fund management companies have been snapped up by domestic investors, who sought to diversify their portfolios. But the funds have slipped below their par value due to turmoil in global markets caused by the U.S. subprime mortgage meltdown.
Fortune SGAM said its planned QDII fund would invest 60-95 percent of its total assets in the Hong Kong stock market, and shares of China-related firms listed in Singapore and the United States.
The China-related firms listed in New York and Singapore must derive more than 50 percent of their revenue from mainland China, it said.
The fund is allowed to allocate 5-40 percent of its total assets to overseas bonds, primarily including those traded in Hong Kong, Singapore and the United States. The bonds must carry a rating of "A" or above by Standard & Poor's.
(Reporting by Charlie Zhu; Editing by Lincoln Feast)
