China to float its 2nd batch of QDII

Updated: 2007-12-21 20:36

ICBC Credit Suisse Asset Management Ltd. announced it will raise 22 billion yuan ($2.87 billion) under the Qualified Domestic Institutional Investor (QDII) scheme, ushering in China's second batch of QDII.

The subscription period for the fund, named "China Opportunity-Global Stock Fund", will run from January 3 to February 1, 2008 for both individual investors and institutional investors, via all major banks and securities companies in the country.

So far, only four QDII products  - JP Morgan Fund QDII, Harvest Overseas Fund, Huaxia Global Selected Stock Fund and Southern Global Enhanced Balanced Fund - have been issued two months ago.

Different from the first batch of QDII, "China Opportunity-Global Stock Fund" will focus its investments on stocks of both companies on Chinese mainland listed in overseas markets and foreign companies which will benefit from China's economic growth.

The QDII fund, which plans to allocate more than 60 percent of its assets in stocks, will also invest in government bonds, repurchase agreements, stock index futures and derivatives.

Zao Guanye, investment manager with ICBC Credit Suisse Asset Management Ltd, will be designated as fund manager. Also, Mr. Boon Hong Yeo and Dr. Patrick Kolb are invited to assist in the overseas business. Mr. Yeo is regional president of Asia with Credit Suisse. He has 20-years of managerial experience and ran similar funds in Singapore and Malaysia during the past few years.

China's overseas investment program, commonly referred to as Qualified Domestic Institutional Investor program, allows banks to take institutions and individual funds in yuan and invest them in fixed-income products and stocks offshore. Before May of this year, banks were restricted to fixed-income products for their overseas investment.

The existing four QDII funds performed under expectation and some of them even saw over 10 percent loss from the principal, largely due to the sharp fall of the Hong Kong stock market in recent months.

However, analysts believed China's QDII products would still have a good performance in the long term.

The Chinese government had underscored its intention to open up the country's financial markets by tripling the investment quota of QDII from 10 billion USdollars to 30 billion USdollars, a move that came just ahead of the third Sino-US Strategic Economic Dialogue held last week.

"Our team should closely focus on the theme of 'China Opportunity' to invest in global equity markets. Under QDII scheme we can seize overseas chances that cannot find on domestic market, " said Cao Guanye, the would-be fund manager.

ICBC Credit Suisse Asset Management Ltd is the first asset management joint ventures in China. Its share holder are Industrial and Commercial Bank of China Co.,Ltd (55 percent), Credit Suisse (25 percent) and China Ocean Shipping Company(20 percent).

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