First western fund manager given direct China access

Ashmore Group gains RQFII status following agreement between UK and China

Ashmore Group, the UK fund manager, has become the first company outside of Hong Kong to receive China’s RMB Qualified Foreign Institutional Investors (RQFII) status, according to media reports.

The China Securities Regulatory Commission (CSRC) decision gives Ashmore, which has $78.5 bn under management, access to China’s renminbi-denominated $3.4 tn domestic equity market and $4.7 tn bond market, the Financial Times reports.

‘This is another important milestone in the opening up of China to outside investors,’ says Christoph Hofmann, Ashmore’s global head of distribution, as quoted by the newspaper. ‘China is a very large economy and investors want access to it. This should benefit both overseas investors and the Chinese capital markets.’

China’s RQFII program was created to give investors unfettered access to mainland Chinese markets; so far, the UK is the only country outside of Asia with an RQFII agreement, which it secured in October 2013 during a trip to Beijing by George Osborne, the UK chancellor. Hong Kong, Taiwan and Singapore have reached similar agreements with China.

China’s RQFII program allows RQFII partners a combined total of 180 bn renminbi ($30 bn) in investment in Chinese capital markets, and the UK has been allotted 80 bn renminbi of that. Last year, however, China expressed its intention to expand the program.

‘The pilot for QFII arrangements have been enjoying sound and steady operation, playing a positive role in expanding institutional investor bases and sources for long-term funds, introducing long-term investment and value investment concepts as well as further opening up capital markets,’ the CSRC said in a press release last July, its most recent statement on the program. ‘Recently, QFII arrangements have sped up in development.’

The CSRC added that the net inflow of funds under the QFII program totaled 60 bn renminbi in the first half of last year.


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