UOB unit to offer investors direct onshore yuan options

The UOB Asset Management has been given a 1.2 billion yuan (S$260 million) facility, known as the Renminbi Qualified Foreign Institutional Investor (RQFII) quota, by the State Administration of Foreign Exchange of China.
The UOB Asset Management has been given a 1.2 billion yuan (S$260 million) facility, known as the Renminbi Qualified Foreign Institutional Investor (RQFII) quota, by the State Administration of Foreign Exchange of China.PHOTO: REUTERS

UOBAM to launch three China onshore RQFII funds in region

FUND manager UOB Asset Management (UOBAM) will soon allow investors direct access to onshore yuan financial solutions, it said yesterday.

The unit of United Overseas Bank said it has been given a 1.2 billion yuan (S$260 million) facility, known as the Renminbi Qualified Foreign Institutional Investor (RQFII) quota, by the State Administration of Foreign Exchange of China.

The scheme allows investors holding yuan to re-invest the money in Chinese capital markets.

"UOBAM will now be able to provide onshore yuan solutions to its institutional and retail clients and will launch three China onshore RQFII funds in the region in the coming months," it said in a statement.

These will be a yuan onshore money market fund, one for onshore bonds and one for onshore equities.

They will be sub-managed by Ping An UOB Fund Management Company, UOBAM's China-based joint venture firm.

The RQFII scheme was started to encourage investors and central banks to use the yuan in a bid to push it to the front ranks of global currencies.

China is said to want the yuan to become a global currency partly to reduce its reliance on the greenback, which is estimated to account for about a third of its estimated US$3.84 trillion (S$5 trillion) foreign exchange reserve.

UOBAM noted that the new funds will complement existing yuan investment solutions, such as the United SSE 50 China exchange-traded fund that was listed on the Singapore Exchange in 2009. This lets investors enter China's popular A-Shares market.

The fund manager also offers other China-related funds such as the United Greater China Fund and the United China-India Dynamic Growth Fund.

UOBAM chief executive Thio Boon Kiat said the yuan is becoming increasingly internationalised: "By offering yuan-denominated onshore solutions to our clients, UOBAM will be able to offer investors direct access to mainland China's onshore equity and fixed income markets.

"This will provide them with the opportunity to participate in China's financial market and be a part of its growth."

rachaelb@sph.com.sg

A version of this article appeared in the print edition of The Straits Times on June 23, 2015, with the headline 'UOB unit to offer investors direct onshore yuan options'. Print Edition | Subscribe