China Asset Management Corp said today it plans to raise up to US$4 billion for its first fund to trade overseas equities to tap growing interest from local investors to diversify risks abroad.
The Beijing-based fund venture will on Thursday start sales of the fund that will invest at least 60 percent of assets in overseas stocks, the company said in a prospectus on its Website.
China Asset has picked US-based T. Rowe Price Group Inc as the fund's overseas investment adviser and JPMorgan & Chase Bank as the asset custodian, according to the offer document.
The fund's investments will also cover overseas government and corporate bonds, asset-backed securities, global depositary receipts, funds and financial derivatives, the prospectus said.
China has been encouraging capital outflows to help ease growth in the country's huge foreign-exchange reserves and prevent the domestic stock market from overheating.
Authorities in June expanded the Qualified Domestic Institutional Investor scheme to brokerages and fund ventures after initially limiting the business to banks and insurers last year.
China Southern Fund Management Co earlier this month launched the country's first overseas-invested equity fund, raising US$4 billion, up from an initial target of US$2 billion.
Four other fund houses on the mainland including Fortis Haitong, partly owned by Belgium's Fortis, and Fortune SGAM, partly held by Societe Generale, have received QDII licenses and are on track to launch their products.
"QDII products are set to gain popularity as the domestic market embraces bigger volatility,'' said Wu Ke, a Zhongtian Investment Consulting Co analyst. "Investors have to diversify their investments to prevent potential losses if the bullish sentiment runs out of steam.''
(Shanghai Daily September 24, 2007)
