STABILITY IS KEY: Mr Ji pointed to the maturity of the Singapore investor, when asked why he chose to list Cosco in the Republic rather than in Hong Kong or Shanghai. -- BT FILE PHOTO

That is because Cosco is listed in Singapore, while the professionals entrusted with the billions invested in China's domestic unit trusts and investment funds were only recently allowed to buy stocks outside the mainland.

Special funds that can invest in markets overseas are known as Qualified Domestic Institutional Investor (QDII) funds, and most started operations last October.

Singapore is among a handful of approved foreign markets for the scheme. Others include the United States, Britain and Hong Kong.

Last Friday, the first-ever fund manager conference was organised to get these QDII funds acquainted with Chinese companies listed on the Singapore Exchange (SGX), whose shares are commonly known as S-shares.

The QDII Funds Conference, organised in Shanghai's Pudong financial district by investor relations firm Financial PR and Singapore stockbroking firm UOB Kay Hian, featured nine companies. They were Cosco, Yangzijiang Shipbuilding, Synear Food, China Hongxing Sports, China XLX Fertiliser, China Energy, China Sky Chemical Fibre, China Animal Healthcare and Li Heng Chemical Fibre Tech.

The companies took turns throughout the one-day conference to present their business objectives and future plans to more than 40 fund managers from eight QDII funds and 14 other investment houses.

For Mr Ji - as well as some other corporate chiefs - it was his first investor-relations meeting with fund managers who live and work with him in his hometown.

And they peppered him with questions on issues ranging from rising steel prices to the falling US dollar.

Many also asked him and the other China chief executives at the conference why they chose to list on SGX, where shares are valued at significantly lower levels than is the case for Chinese companies listed in Hong Kong or Shanghai.

'I told them SGX is very stable. There are more mature investors there. Some shareholders who bought my shares when we first listed at 20 cents are still shareholders today,' said Mr Ji, whose presentation to fund managers was made to a full house.

'In Hong Kong, for example, there is much more of a gambling mentality.'

Cosco shares closed at $3.73 last Friday.

QDII funds can place investments overseas, subject to a government-approved quota. By the end of last September, the combined quota had reached US$42 billion (S$58.05 billion), according to the Xinhua news agency.

Speaking to Singapore reporters in a separate media conference, representatives from two QDII funds said they allocated their assets geographically in line with established principles.

Mr Peter Zhu, the head of marketing at China International Fund Management (CIFM), said that in terms of asset allocation, his firm's QDII fund mirrors the MSCI ex-Japan portfolio.

But it is also overweight on Hong Kong (44 per cent of assets) and Singapore (7 per cent).

Stock selection is currently done in conjunction with the fund's foreign adviser, JPMorgan, but Mr Zhu expects CIFM's local fund managers to take over that role as time progresses.

QDII funds have come under fire in recent weeks, as a sharp fall in stock prices in Shanghai and Hong Kong has translated into losses for most investors.

But QDII managers said they remain confident that more funds will be launched in the months to come, despite the ongoing market turmoil.

ignatius@sph.com.sg

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'I share UOB Kay Hian's belief that Singapore-listed companies can tap into the huge appetite of Chinese investors for overseas investments. This inaugural conference is a first step towards achieving that goal.'
MS KATHY ZHANG, group MD of Financial PR, on Chinese funds investing abroad