| HONG KONG
HONG KONG Jan 27 Chinese asset management firm
CSOP said it has started applying for new quotas for its
newly-listed renminbi exchange-traded fund (ETF) in London due
to strong demand, signaling international investors' growing
appetite for yuan assets.
The fund, which tracks the FTSE China A50 Index to
allow investors to have exposure to the top 50 companies in
mainland China, has exhausted 1.45 billion yuan ($239.60
million) of its 1.5 billion yuan quota, only two weeks after its
It is the first Renminbi Qualified Foreign Institutional
Investor (RQFII) exchange traded fund (ETF) available in London,
after the firm listed another yuan ETF in Tokyo tracking CES
China A80 Index a year earlier.
"We've seen a lot of demand from institutional investors in
Europe, especially insurance companies and family offices," said
Ding Chen, chief executive officer at CSOP Asset Management,
which managed $5.7 billion assets as of end-2013.
"We did a series of roadshows in Europe recently and found
that interest in yuan products is not only from Germany and
Switzerland where investment demand is usually strong, but also
from countries like Itlay," Ding added.
Ding said the firm is also considering capitalising on
London's 80 billion yuan RQFII quota for the fund, whose manager
is London-based Source.
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
As of Dec. 25, a total of 157.5 billion yuan of quotas had
been approved for 52 RQFII licences under the 270 billion yuan
quota granted to Hong Kong.
Britain's Ashmore also kicked off London's quota
earlier this month.
As China's currency outperforms in the region, global
investors have started to add yuan assets to their portfolios to
Ding said the company is studying whether to list more yuan
products in European cities, such as Frankfurt, to meet such
CSOP 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.
Offshore ETFs focused on the A-share market are among the
few options for foreigners to access mainland markets.
ETFs offered under RQFII are usually preferred more by
investors than those under QFII launched in 2002, given lower
counterparty risk and tracking error.
However, Ding noted foreign investors are not without
concerns about China, particularly its shadow banking problems
and its progress in opening up domestic markets.