(China Alert) China strategies and quota diverge
- QFII, RQFII
·Mega RQFII quotas are now a real option for China access
·The largest asset managers are set for increased competition
·Firms are readjusting exposure between QFII and RQFII
Update: Recent market volatility in China has led to differing R/QFII access strategies among global investors. On the one side, there are an increasing number of managers choosing to draw down their QFII quota (USD300m+ in January alone), but this is not entirely a one-directional trend. Data released this week showed a very noticeable outlier; Vanguard was provided with an additional RMB20bn in RQFII quota, bringing its total market access to RMB30bn. Irrespective of how the Chinese markets are behaving, the pioneer in passively-managed AUM has clearly set its sights on the China A-share market. To steal a quote, two roads have diverged in the yellow wood. What remains to be seen is whether Vanguard taking the path less travelled will make all the difference. It is, however, a choice that all global managers and asset owners will need to make throughout 2016.
Make no mistake, Vanguard is now the undisputed leader in R/QFII access at a combined RMB30bn (USD4.6bn) and unquestionably demonstrating the firm’s long term commitment to the A-share (and China) market. The quota itself was initially meant for…
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