Barings Launches China Bond Fund

Tara Loader Wilkinson Editor Asia 11 September 2012

Barings Launches China Bond Fund

Baring Asset Management, the investment firm, has launched a China Bond Fund, to be run by Sean Chang, head of Asian debt.

Chang joined Barings in May from HSBC Global Asset Management and has over 18 years of fixed income and foreign exchange investment experience in Asian markets.

The new fund will aim to maximise total return, over the long-term, consisting of income, capital appreciation and currency gains, by investing in China related debt securities and RMB denominated debt securities.

Until recently, China’s financial markets have been largely closed to foreign investors, with direct access to domestic equity and bond markets limited to institutions with a Qualified Foreign Institutional Investor quota.

The recent development, over the last 18 months, of the offshore Renminbi bond market has enabled fixed income investors to obtain direct exposure to Renminbi-denominated debt assets. The move suggests the Chinese authorities’ are committed to opening up China’s capital markets and transforming the RMB into a global currency.

This increase in issuance has been matched by a marked increase in demand, as investors seek access to the expected long-term appreciation of the RMB, which up until 2007 had been more tightly controlled by the Chinese authorities.

While the RMB has recently been allowed to strengthen against the US dollar, Barings’ view is that the currency remains structurally undervalued with huge potential for appreciation relative to not only the US dollar, but all other major currencies.

Barings launched its flagship Baring Hong Kong China Fund in 1982. As at the end of June 2012, Barings managed total assets worth US$4.9 billion in Greater China, with a further US$1.5 billion invested in specialist credit and emerging market debt.

To complement its range of emerging market fixed income products and capitalise on investment expertise in this area, Barings also recently launched the Baring Asian Debt Fund and is planning to launch the Baring Emerging Market Corporate Debt Fund, subject to regulatory approval.”

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes