Investec Asset Management has announced that its Global Strategy Fund range can now invest in the Chinese domestic equity market, using the
Shanghai-Hong Kong Stock Connect programme.
Regulatory approval for the firm's Luxembourg-domiciled Ucits Global Strategy Fund range was received in December 2014 and Investec says it is the first global investment manager of Ucits funds set up to invest using Stock Connect.
Stock Connect is a programme allowing foreign investors to invest in Shanghai's stock market through Hong Kong, and Chinese investors to invest in the Hong Kong stock market from China.
Trading volumes in Stock Connect sank shortly after its launch in November last year and the problem was blamed on Ucits funds. It was found Ucits regulations might not be compatible with Chinese regulations – for example, over the interpretation of beneficial ownership rights.
In another development announced last year by Investec AM, the firm was awarded a renminbi qualified foreign institutional investor (RQFII) licence by the China Securities Regulatory Commission (CSRC), enabling the firm to invest directly into A-shares listed in Shanghai and Shenzhen, and the Chinese bond market.
These developments allow Investec AM to provide clients with direct access to mainland Chinese markets, which is generally restricted for foreign investors.
Greg Kuhnert, manager of the Investec Asian equity strategy, says that the China A share market appears "rich with opportunities" for new investors.
Investec AM intends to use its RQFII licence and quota in the near future to launch two new daily dealing Ucits funds in its Global Strategy Fund range, one focusing on Chinese equity exposure and the other on onshore Chinese bonds.
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