(China Alert) RQFII: Asset owners strengthen their hand
·Two Canadian pension funds have received RQFII licenses
·This indicates a strategic shift towards RMB fixed income
·We believe R/QFII program harmonization should happen by 2018
Update: December saw two large Canadian pension managers receive RQFII licenses from CSRC, namely the Canadian Pension Plan Investment Board (CPPIB) and Ontario Pension Board (OPB). This represents a step forward for the RQFII scheme as we have seen asset managers, insurers, sovereign wealth funds and now pension managers all using the channel to actively enter China’s financial markets. Fundamentally, Z-Ben Advisors believes this reflects an increasing demand for changes in asset allocation, particularly towards fixed income. We expect that by 2018, not only existing QFII holders, but also new players, should adjust their inbound strategies to include RQFII as the two programs harmonize.
It is no surprise to us that these two Canadian firms are the first among pension industry peers to move into RQFII. Both have consistently shown a willingness to actively diversify and make forward-looking investments. Z-Ben Advisors believes…
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