Chinese fund managers will look overseas to diversify says BNP Paribas

Chinese fund managers plan to expand into overseas markets in order to expand their client base according to latest research from BNP Paribas.

In its “Market Compass for China” report, the French bank stated it is seeing Chinese fund managers looking to diversify their clients beyond domestic and regional borders.

According to BNP Paribas, Chinese fund managers will target European clients with UCITS vehicles to raise assets as well as look to set up offices in Europe and the US to be closer to local regulators, distributors and investors.

It is also suggested that fund mangers will look at setting up mutual recognition of funds and pointed to the agreement between Switzerland and Hong Kong signed in December as an example.

The agreement between the Securities and Futures Commission and the Swiss Financial Market Supervisory Authority allows eligible Swiss and Hong Kong public funds to be distributed in each other’s market through a streamlined vetting process.

BNP Paribas’ research comes at a time of growing liberalisation in Chinese markets.

The opening up of the China Interbank Bond Market (CIBM) and developments within the Stock Connect initiatives have been crucial to this building on early developments such as QFII, RQFII.

The CIBM ruling from February 2016 to give foreign institutions quota-free access to the third largest bond market in the world created a new route to the coveted onshore bonds.

Launching the Shenzhen Stock Connect trading link last December alongside the existing Shanghai equivalent is also aimed at building a more extensive capital market.

It is also hoped that the venture will allow investors to experience increased economic benefits from both mainland China and Hong Kong, increase cooperation between the two and consolidate Hong Kong’s position in the financial industry.