Fund Management

BNP Paribas Hails China's Investor Quota Regime

Tom Burroughes Group Editor 11 May 2018

BNP Paribas Hails China's Investor Quota Regime

Giving this publication more detail on a new fund launch, the financial group has also lauded China's decision to reignite a scheme enabling mainland investors to tap into global markets.

BNP Paribas, which confirmed to this publication that it intends to run an environmental, socially and governance-themed fund for mainland China investors, has elaborated on its plans. It also praised China’s government for resuming a regime enabling such funds after a two-year hiatus.

As reported earlier this week, the bank’s asset management arm is taking advantage of China’s widening of investment quotas to bring out such a fund, while also catering to perceived appetite for putting money into ESG-driven projects.

China in February resumed granting QDLP licenses (Qualified Domestic Limited Partnership). Foreign fund managers with newly awarded quotas will be able to raise money in China for investment overseas. Prior to this, China had sought to curb capital outflows from the country, fearful of a stampede that could hurt is renminbi currency.

Asked about its plans, BNP Paribas Asset Management told this news service: “This fund focuses on investing in water related companies including water utilities, water infrastructure and water treatment.”

“This is a water themed, multi-sector, global equity portfolio that has a small-mid cap bias with a track record since 2008.  The launch date would be announced in due course. Chinese investors, especially high net worth investors, have become increasingly sophisticated in investing in overseas products and given strong government policy in ESG.”

The Paris-headquartered firm, which has an extensive presence in Asia, is among a number of firms awarded fresh licenses by China this year, such as the investment arms of JP Morgan, Standard Life Aberdeen, Manulife Financial and Allianz (source: Reuters). They have created outbound investment subsidiaries in Shanghai to conduct QDLP businesses. When a firm gets such a licence, the managers must complete fundraising within six months.

“The outlook for China’s market and financial reforms should provide opportunities for foreign investors and asset managers.  The granting of QDLP licenses to foreign asset managers like ourselves allows us to raise assets through domestic qualified investors’ money to invest offshore and showcase foreign managers’ expertise with global investments,” BNP Paribas AM told this publication.

“This is a definite plus given that foreign asset managers have always been looking for opportunities to find investments from potential untapped wealth in one of the region’s growth markets,” it continued.

“Generally, we believe that the Chinese economic recovery is gaining momentum, thereby providing potential opportunities to establish a solid foundation for improving the entire infrastructure of BNP Paribas AM's business in China. In addition, we will continue to reinforce our distribution capabilities by focusing on various types of Chinese onshore investors with our strong understanding of the global market,” it added.


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