Funds News
- BOC raises US$100m fund for HK stocks
Date: 19-Apr-2007 Sources: (Shenzhen Daily)
BANK of China (BOC) said yesterday it had raised US$100 million for a domestic fund targeting overseas mutual funds that mainly invest in Hong Kong-listed stocks, the first of its kind on the mainland.
The fund, launched in February under the Qualified Domestic Institutional Investor (QDII) scheme, which permits selected financial firms to invest overseas on behalf of mainland residents, made its first purchase in Hong Kong on Tuesday, the Hong Kong and Shanghai-listed company said.
A BOC official said the fund raised the equivalent of 793 million yuan (US$102.5 million).
The fund will focus its investment on overseas mutual funds that are predominantly exposed to shares of Hong Kong-listed mainland companies, known as H shares and red chips.
The firm said the fund should be an attractive investment vehicle for mainland investors, given that many A shares listed in Shanghai and Shenzhen are trading at an average discount of 50 percent to their Hong Kong-listed counterparts.
'Mainland residents can effectively reduce investment risks by investing in the Hong Kong stock market via QDII,'it said, adding that it would reopen the fund for new subscriptions next month.
The government has issued quotas of around US$14 billion to 17 domestic and foreign firms under the QDII scheme, launched last year to encourage capital outflows and so ease upward pressure on the value of its yuan currency.
However, QDII was poorly received by mainland residents as nearly all QDII money went into fixed-income or money market products that do not offer sufficiently attractive returns to make up for the exchange rate losses that investors would incur if the yuan keeps rising.
Bank of China terminated one of its overseas investment funds in February, about five months after its launch, after a sustained rise in the yuan against the U.S. dollar dampened returns.
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