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BIZCHINA / Center
Fund management firms to invest in overseas stock markets
(Xinhua)
Updated: 2007-07-31 11:31
Two Chinese fund management firms are planning to focus their overseas
investments on stock markets, after domestic fund management firms were
allowed by China's securities watchdog earlier this month to follow
commercial banks into overseas securities.
The move would teach domestic fund management firms how to invest
globally and help alleviate the pressure of soaring foreign exchange
reserves on China, said analysts.
China Southern Fund Management Co Ltd, approved last week as a qualified
domestic institutional investor (QDII), will select 48 countries and
regions for its portfolio, with initial investments targeting shares
listed in Hong Kong and global funds.
Related readings:
?Southern Fund wins nod to invest abroad
?Banks use only 26% of QDII quota in 1st half
?Insurers to be allowed to increase overseas investment
Southern Fund, based in the southern city of Shenzhen, expected to launch
its first QDII product in one or two months with a quota of?US$1 billion,
said company general manager Gao Liangyu.
China Asset Management Co Ltd (China AMC) would also have its first QDII
product focus on overseas stock markets, including developed markets in
the United States, Europe, Japan and Hong Kong and in some emerging
markets, the Shanghai Securities News reported on Monday.
A maximum of 30 percent of the Beijing-based firm's quota would be
channeled into the stock market in Hong Kong, while a smaller part would
fund overseas bond purchases.
The investment strategy of the two firms will be different from that of
the commercial banks, which mainly invest in international money markets,
bond markets or a single stock market.
As share values in China's markets continue to rise, "diversified
investments around the globe are the only way to reduce risks", said Xie
Weihong, director of the international department of Southern Fund.
Global investments would also enable domestic investors to benefit from
world economic growth, said the report, citing figures from Morgan
Stanley, showing the A-share market yielded an annual average rate of 45
percent over the past three years, while returns were even higher in the
markets in Egypt, Argentina and Indonesia.
Investing in countries whose currencies were expected to appreciate
against the yuan would help investors evade exchange losses, it added.
Southern Fund has signed an agreement with US-based Mellon Financial
Corp., a US-based global financial services company, to co-develop the
first QDII product, while China AMC has chose the US-based T. Rowe Price
as its consultant for overseas investment.
(For more biz stories, please visit Industry Updates)
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