Aberdeen Asset Management Asia Limited (AAMAL) confirms it has been awarded an RQFII licence in the latest round of announcements made by the CSRC in August.
Aberdeen applied for RMB600 million investment quota and expects the actual sum to be confirmed by SAFE in November. Once 80% of the allocation is invested, it may apply for an additional quota.
With the award Aberdeen plans to launch a China A share fund. This will be marketed globally to institutions such as private banks and discretionary fund managers, at first those in Europe.
The award is the company’s first RQFII licence and follows the award of a QFII licence in July 2010, with US$200m being granted in October of that year (with a further US$55m this July). Aberdeen uses that licence to invest in both onshore domestic fixed income securities and equities.
The launch of an A-share fund represents a gradual shift in the company’s view of Chinese equities. Since 1997 it has managed a China equity fund that is characterised by its big weighting in Hong Kong and other non-mainland domiciled stocks.
But in recent years Aberdeen’s Hong Kong-based China equities team, which is an integral part of the regional team based in Singapore, has identified more mainland companies whose business clarity and governance structures meet its quality thresholds.
Aberdeen is confident the A-share fund will attract interest from both existing and clients who, for internal policy or other reasons, want direct access to China but want to invest conservatively and are not looking to time the market.
The A-share market offers exposure to sectors that may not be accessible in the smaller H share market. They include consumer, travel, healthcare and financial services, where state-owned enterprises are less dominant.
Aberdeen Asset Management Asia Managing Director, Hugh Young, comments:
“Although China is a huge and exciting market, we are instinctively cautious and have shunned stocks that do not protect minorities or whose structures do not give investors proper legal ownership of the underlying assets. In the past it has been tough to find quality companies we like. That has been changing gradually and we could now pull together a portfolio of 20-25 stocks with which we would be comfortable, and with low cross-over with our existing fund.”
For further information, please contact:
Cammy Loh, Aberdeen Asset Management
Tel: +65 6395 2475 or firstname.lastname@example.org
Lydia Lee, Aberdeen Asset Management
Tel: +65 6395 2471 or email@example.com