After obtaining the RMB Qualified Foreign Institutional Investors (RQFII) status by the China Securities Regulatory Commission (CSRC), Ashmore has launched three Sicavs on the Chinese market.
The funds aim at offering a range of investment opportunities:
- Ashmore Chinese Debt Fund: seeks to access returns available from a strategy of Chinese debt securities issued by Sovereigns, Quasi Sovereigns and public and private sector Corporates denominated in RMB and traded on the China Interbank Bond market and or the China exchange traded bond market
- Ashmore Chinese Equity Fund: investing in Chinese A-shares listed on the Shanghai and / or Shenzhen stock exchanges
- Ashmore Chinese Multi-Strategy Fund: generating returns from a balanced strategy of the two above strategies
The launch of the new funds has relied on Ashmore’s close relationship with both Northern Trust, who provide all aspects of Fund Administration in Luxembourg, and HSBC who will act as the onshore sub custodian. A strong, tri-party relationship was essential to the successful delivery of this unique proposition.
Christoph Hofmann, Ashmore’s global head of Distribution commented: “China is not only the world’s second largest economy, it is also one of the most difficult to access, with local markets having been largely inaccessible to foreign investors. The launch of these funds changes this dramatically. Investors now have unparalleled access to local Chinese securities and these funds provide investors the opportunity to invest in one of the most dynamic markets in the world.
“Domestic Chinese equities and fixed income assets are significantly under-represented in most global portfolios and these funds will allow our clients to make dedicated investments in China and suitably diversify their asset allocation.”
Jan Dehn, head of Research, discusses, “China is in the midst of a storming change as it transforms itself from an export to a domestic-led economy. We believe China’s aggressive appetite for reform and forward-looking policies will place the country in a very strong position to grow in the future. We think the transformation of the Chinese economy will be especially positive for the domestic bond market which will play a central role macroeconomic policy. China’s domestic bond market is one of the largest in the world and is set to become increasingly accessible to investors outside of China.
“Local Chinese equities have been hit by poor investor sentiment amidst slower growth but we believe this has created a buying opportunity. Valuations are depressed, Chinese indices remain around 75% lower on a price-to-earnings basis compared to pre-crisis peaks and P/BV multiples are at near decade lows. This is despite a strong expected earnings recovery and the country’s strong fiscal position which means there’s huge firepower to stimulate growth if necessary.”