The China Securities Regulatory Commission confirmed that the company had received the licence, which permits it to participate in China’s mainland stock exchange, at the end of last week.
The company also confirmed that it is to launch a China A-shares fund, which will be marketed globally to institutions such as private banks and discretionary fund managers.
The company said it is “confident” that the product will attract interest from clients who want direct access to China but want to invest conservatively and are “not looking to time the market”.
“Gradual shift”
It added that the new fund represents a “gradual shift” in its view of Chinese equities over recent years, which has seen it increasingly identify with mainland companies.
The company’s RFQII licence follows its receipt of a QFII licence in July 2010, which it has since used to invest in onshore domestic fixed income securities and equities.
The company expects to receive an RMB600m (£60m, $98m, and €77m) investment quota and said it may apply for an additional quota once 80% of its allocation has been invested.
Asia managing director, Hugh Young, said: “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, but 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.”
China’s A-share market offers investors exposure to sectors that may not normally be accessible in the country, such as consumer, travel, healthcare and financial services, where state-owned enterprises are less dominant.
The country’s stock exchange was previously been closed to foreign investors, but is expected to open up at the end October with the initiation of the “Shanghai-Hong Kong Stock Connect”.
The initiative, an agreement between the Securities and Futures Commission of Hong Kong and the China Securities Regulatory Commission, will allow investors in both countries to participate in each other’s stock markets.
Since its announcement in April, many companies have launched funds which will directly invest into the country, such as Heptagon in August, and Lyxor earlier this month.
