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Rise of RMB and opening of China’s Capital Markets present new opportunities for international investors

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The growing significance of the Chinese Renminbi (RMB) and the opening of the country’s equity and bond markets are creating new opportunities for overseas investors, according to a number of leading experts speaking at a briefing session in London on 13 July.

The briefing session, which was hosted by China Universal Asset Management Company Limited and Industrial and Commercial Bank of China (ICBC), highlighted the key drivers shaping the development of China’s currency, capital markets, economy and regulatory environment. The speakers commented on how these drivers are attracting increased foreign investment into China’s capital markets, which are in turn developing stronger links with global capital markets.
 
To underline its commitment to expanding its operations into Europe, China Universal also announced the introduction of a new Luxembourg UCITS SICAV, called “China Universal SICAV” from which the China Universal group company plans to launch its first UCITS fund in the coming months. 
 
The UCITS product will be a RQFII bond fund investing mainly in Chinese domestic fixed income, accessing the Chinese inter-bank bond market.  This will be the first of a pipeline of UCITS funds to be launched by China Universal group company.
 
Dr Li Wen, Chairman of China Universal, said: “The launch of this new SICAV marks a significant milestone in the expansion of China Universal in Europe.  As fixed income returns in developed markets continue to remain low, we believe there will be considerable interest from European institutional investors, family offices and private banks in accessing the Chinese domestic bond market, which is now larger than those of both France and Germany and is highly liquid and transparent.
 
“Our existing Chinese domiciled funds have provided outstanding returns for our clients, and we are delighted to be extending our successful investment formula to European investors.  Our strategy is to build trusted partnerships with international investors who are seeking to invest into China.  We take great pride in our commitment to investment expertise, service excellence and leadership in the fast growing Chinese asset management industry,” said Shelley Yang, Head of international business of China Universal and Managing Director of China Universal Asset Management (Hong Kong) Company Limited (“China Universal HK”). 

Mr Li Yong, General Manager of Custody Service at ICBC, said: “The pace of change affecting China’s financial sector has increased rapidly in recent years, led by the growing internationalisation of the RMB.  RQFII has already expanded into 14 countries around the world and the quota now stands at RMB 1 trillion. Indeed, market capacity has doubled from RMB 30 trillion in 2013 to RMB 60 trillion in 2014.  While overseas investors currently account for only 1.7 per cent of the Chinese capital markets we expect this to grow rapidly over the coming years towards the percentage of 20 per cent to 30 per cent that is common in other emerging markets.” 
 
“As the largest custodial bank in China, we closely monitor fund performance and are pleased that several of the consistently top performing funds are from China Universal.  We have a long standing relationship with China Universal and look forward working together to support the growing internationalisation of the RMB.”  
 
A number of distinguished speakers addressed the briefing session including Mark Boleat, Chairman of the Policy and Resources Committee, City of London; Peter de Proft (pictured), Director General of EFAMA; Dimitris Melas, Managing Director, Global Head of New Product Research, MSCI; Sherry Madera, Minister-Counsellor of Director for Financial and Professional Services, and ICT, UK Trade & Investment; Alex Birkin, Global Leader of Wealth and Asset Management Advisory, EY; and Alan Wheatley, author and editor of The Power of Currencies and Currencies of Power.

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