There are now 66 asset management wholly foreign-owned enterprises (WFOEs) operating in China, consultancy Z-Ben Advisors said in a note to clients on September 4. These WFOEs are in turn owned by some 50 different global asset management firms. The bulk of the group has a business focus on the qualified domestic limited partnership (QDLP) scheme, which allows domestic investors access alternative investment opportunities offshore, Z-Ben noted.
Of the other firms, some still operate joint ventures focusing on domestic private fund business, while others have a dual-track business, targeting both QDLP and domestic private funds.
Z-Ben also said that, while some of the firms have made clear strategic choices, nearly half of the firms it surveyed are still uncategorised — either because they have only received their licences in recent months or because they have yet to make formal product launches after longer periods. Vanguard, for example, has had a WFOE for two years but is yet to dip its feet in the water with either QDLP or local funds, Z-Ben notes.
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Despite a broad sell-off of emerging markets assets through the summer, Chinese equities have been resilient, according to a September 4 report by the Institute of International Finance. A-shares saw $5bn in inflows out of total EM equities inflows of $7bn, or 82% of the total. Overall portfolio inflows to EMs slowed to $2.2bn in August from $13.7bn in July.
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The 25% stake sale of Bangladesh's DSE to the Shenzhen Stock Exchange (SZSE) and the Shanghai Stock Exchange (SSE) was completed this week, with local media reports noting that the Chinese buyers are now formally strategic shareholders in DSE.
Xie Wenhai, a deputy director general with the SZSE, was appointed as a member of the DSE board of directors.
KAM Majedur Rahman, a DSE managing director, told local media that the Chinese consortium had deposited the equivalent of $113m in a Standard Chartered Bank Bangladesh account, This was then transferred to a DSE account with City Bank and the bourse credited shares to the consortium members’ beneficiary owners’ accounts as per the May 14 share purchasing agreement.
The Chinese group also paid the Bangladesh government $1.8m in stamp duties, according to Rahman.
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United Overseas Bank (UOB) signed a memorandum of understanding with Shanghai Pudong Development Bank, targeting co-operation under the Belt and Road Initiative, UOB announced on September 5.
"UOB and SPD Bank will collaborate to provide companies with financial solutions covering investment advisory, cross-border renminbi transactions, syndicated loans, project and trade finance and cash settlement," UOB said.
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There were 425 registered investors on the Bond Connect scheme as of August, with average daily trading turnover of Rmb3.5bn, according to data released by Bond Connect Company (BCCL).
"Among the accounts, 59% are opened by global asset managers and fund managers in the form of various investment products, while the other 41% are for prop trading purposes by banks, securities companies and other financial institutions," BCCL said in a September 3 report. "Investors come from diverse jurisdictions across the globe, including Hong Kong SAR, United States, Taiwan, Singapore, Canada, Luxembourg, South Korea, Japan, United Kingdom, Australia, Germany, Ireland, France, Switzerland, Philippines, etc."
The report added that policy bank bonds, negotiated certificates of deposit, and Treasury bonds are the most traded categories, with the main tenors being less than one year, 7-10 years and one-three years.
Foreign holdings of Chinese bonds reached Rmb1.6tr in July, nearly double the Rmb882bn a year earlier, when the scheme was launched.