(Yicai Global) Dec. 29 — Shanghai’s financial regulators have started to allow Chinese institutional investors to participate in its Qualified Domestic Limited Partner program, a trial outbound investment scheme, to give them better access to overseas securities markets. Previously only approved foreign asset managers were allowed to take part.
Each Chinese investor has been granted a quota of USD50 million, Yicai Global learned from industry insiders.
The QDLP scheme was formed in 2013 to allow international investors to set up pilot funds in China and raise Chinese yuan funds for overseas investment, including unlisted equities, bonds and other securities abroad.
Until now, Chinese investors have had to go through channels such as the Qualified Domestic Institutional Investor scheme, the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect in order to invest in securities abroad.
In Shanghai, the first QDLP pilot city, about 30 global asset management firms, including the US’ Barrings and Singapore’s Fullerton Investment Management, have been approved to use this mechanism and have issued over 40 funds.
However, the tide is turning. In December last year, Shanghai-based Guotai Junan Investment Management became one of the first local financial institutions to secure a QDLP trial qualification. In June, it raised USD100 million for a QDLP product from its own funds.
And SWS MU Fund Management also qualified for QDLP trials this year, with the initial capital being provided by Chinese broker Shenwan Hongyuan Securities. The Shanghai-based asset manager has already formed a number of strategic reserves, including multiple assets, absolute income and others, and is actively participating in investment opportunities of high-quality assets such as stocks, bonds, commodities and real estate investment trusts, its offshore investment division said.
Investors need to seriously consider whether to include alternative assets in their portfolios to increase investment income sources, as rising inflation expectations may erode returns from conventional assets, it added.
Editors: Liao Shumin, Kim Taylor