The Luxembourg-domiciled Sicav invests in high quality issuers, primarily in top-grade CNH [Hong Kong] bonds, offering investors initial yields of between 1% and 1.5%.
Its manager, Helen Lam, has a long-term total return target of around 5% including currency appreciation. Lam also looks after the Allianz Renminbi Currency Fund.
Hong Kong-based Lam said: “We expect that high grade quality CNH bonds should be able to offer a stable return of 3% to 4% through the attractive yield component. We also expect to enhance the portfolio’s total return through duration positioning to capture the policy-driven interest rate movements in mainland China.
“We also see transaction turnover in the CNH market continuing to pick up pace, with the size of Hong Kong’s offshore RMB pool approaching an all-time high, thus easing market concerns on the liquidity of offshore RMB.”
She is a firm believer that cross-border RMB trade settlement should continue to be the key driver of CNH liquidity growth in Hong Kong and will lead to a more stable CNH currency movement that is increasingly driven by real business demands rather than pure currency speculation.
