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Citi Online Academy
Examining London’s RQFII Developments
November 21, 2013
Securities and Fund Services
This discussion is provided for informational purposes only. For further information, please contact your Citi Representative.
Table of Contents
1. China RQFII Market Update 3
2. RQFII Scheme: A New Chapter of China Investment 9
3. Funds Passporting in Asia Pacific: Fifteen Markets, Eight Players, Three Schemes, One Objective 22
1. China RQFII Market Update
Kevin Wong
Securities Country Manager, China
Citi Securities and Fund Services
kevin.sc.wong@citi.com
Capital Market Update
Market Highlights and Economic Outlook
China’s GDP grew by 7.8%YoY in 3Q, higher than 7.5% in 2Q and
7.6% in 1H, in line with expectations and steadily recovering from the
moderate deceleration observed in the first half of 2013.
– Official PMI figure for September is 51.1%, rising for three
consecutive months since July.
– CPI growth reached the highest level in the past seven months,
standing at 3.1% in September.
The GDP growth rate in 2H will be likely to stand at the same level
with 1H at 7.6%, making the government’s target of 7.5% for 2013 a
likely reality.
The central government is pursuing to stimulate Chinese economy by
the launch of China (Shanghai) Free Trade Zone, which is meant to
facilitate a more opened channel to provide RMB services.
Economy growth recovers in Q3 and China is on track for 7.5% for the year.
4
3rd Plenum of the 18th Central Committee of the
Communist Party of China (9-12 November)
Key Messages
Commitment to “comprehensive deepening of reforms”
– With “decisive accomplishments in key sectors by 2020” – further
suggesting a commitment to broad reforms
Greater significance in the role played by market forces
– Market forces to have a “decisive” role (as opposed to “basic role”)
– would seem to indicate less intervention of the government
Greater efficiency and fairness in the allocation of resources
Commitment on the speed of the implementation of the Free Trade
Zone
Two high level groups will be formed under the central leadership –
one for reform, and the other on national security
Comparative Analysis of Capital Market Access
QFII RQFII
Regulator CSRC, SAFE CSRC, SAFE, PBOC, Hong Kong SFC
Criteria of Applicants Commercial Banks
– In operation for more than 10 years
– Securities AUM no less than USD 5 billion
– Tier 1 Capital no less than USD 300 million
Securities Companies
– In operation for more than 5 years
– Securities AUM no less than USD 5 billion
– Capital no less than USD 500 million
AMC, insurance companies and other institutions
– Business experience of more than 2 years
– Securities AUM no less than USD 500 million
Financial institutions registered and mainly operated
in Hong Kong
Must have asset management license (Type 9 ) from
Hong Kong securities regulators and already have
an asset management business
Investment Scope Stocks, bonds, funds, warrants, IPOs, bond issuance
and index futures
Stocks, bonds, funds, warrants, IPOs, bond issuance
and index futures
FX Required Not required
Markets Accessible Stock Exchange
Interbank Bond Market
CFFEx
Stock Exchange
Interbank Bond Market
CFFEx
5
What’s New in China RQFII
RQFII License and Quota Approval Status
Total RQFIIs since inception: 54
Total approved in 3Q13: 13
Total approved in Oct13: 5
As of end of October 2013, a total of 47 Hong Kong based institutions
with RQFII qualification have been approved with RQFII quota as
below
– Fund management companies: 16
Total approved quota of RMB98.15 billion
– Securities companies: 13
Total approved quota of RMB26.15 billion
– Other FI institutions: 18
Total approved quota of RMB15.3billion
SAFE has indicated a preference to approve smaller size quota per
applicant initially with a streamlined process to grant additional quota.
Total RQFII Quota Approved Since RQFII Launched
6
RQFII ETF by AUM ( as of Nov 15, 2013)
Top 4 RQFIIs by Quota ( as of Nov 15, 2013)
Unit: CNY Billion
Name of ETF AUM (RMB billion)*
CSOP FTSE China A50 ETF 18.708
ChinaAMC CSI 300 Index ETF 8.155
E Fund CSI 100 A-Share Index ETF 1.574
Harvest MSCI China A Index ETF 1.427
Institution Name
RQFII Quota
(RMB in Billions)
CSOP Asset Management Ltd. 22.60
China Asset Management (HK) Ltd. 21.80
E-Fund Management (HK) Ltd. 18.70
Harvest Global Investments Ltd. 11.25
*Source: Hong Kong Exchange and Clearing Limited
RQFII Market Update
RQFII quota of RMB 80 billion granted to London and
RMB 50 billion to Singapore respectively
On 22 October, the Chinese and Singapore governments jointly
announced the expansion of the RQFII scheme to incorporate
Singapore, with an initial quota of RMB 50 billion.
On 15 October 2013, the Chinese and British governments jointly
announced that China is going to grant a RQFII quota of RMB 80
billion to London-based investors at the Fifth China-UK Economic and
Financial Dialogue.
CSRC indicated it is reviewing the application requirements internally.
We are expecting that the London/SG RQFII schemes may be similar
to HK RQFII scheme . CSRC is not expected to make material
changes to the current implementation rules for RQFII scheme when
it is expanded to London/Singapore.
RQFII scheme continues to expand. A quota of RMB 80 billion and RMB 50 billion was granted to London and Singapore
respectively. RQFII qualifications were granted to non-Chinese financial institutions under the HK RQFII scheme.
7
RQFII granted to non-Chinese financial institutions
Since July 2013, CSRC has opened the door to non-Chinese financial
institutions based in Hong Kong for the RQFII qualification.
Previously, only Hong Kong subsidiaries of qualified China mainland
financial institutions registered and mainly operated in Hong Kong
have been granted the RQFII qualification.
Until end of September, below seven eligible financial institutions with
non-Chinese background have been awarded RQFII licenses:
– Income Partners Asset Management (HK) Limited
– HSBC Global Asset Management (Hong Kong) Limited
– The Bank of East Asia, Limited
– SinoPac Asset Management (Asia) Ltd.
– Value Partners Hong Kong Limited
– PineBridge Investments Hong Kong Limited
– Chong Hing Bank Limited
RQFII approved for proprietary trading
After receiving RQFII license approval in August 2013,the Bank of
East Asia ("BEA") publicly indicated that it will use the RQFII
qualification for proprietary trading, thus became the first RQFII
approved to operate proprietary investment.
CSRC further confirmed that it is open to approve RQFIIs for
proprietary trading.
QFII and RQFII Market Update
RQFII products to be launched outside Hong Kong
According to market news, below two RQFII products are soon
to be launched in NYSE Arca, a leading listing and trading
platform for ETFs:
– DB X-trackers Harvest China Fund, utilizing RQFII quota of
Harvest Global Investments, will be launched by Deutsche
Asset & Wealth Mangement.
– KraneShares Bosera MSCI China A Share ETF, utilizing
RQFII quota of Bosera Asset Management (International),
will be launched by KraneShares.
SAFE indicated RQFII is allowed to launch open-ended public
funds with its RQFII quota outside Hong Kong.
– SAFE further confirmed that RQFII needs to clearly outline in
its investment plan the proposed RQFII structure, destination
of product launch, and roles of all relevant parties to the fund.
Citi further clarified with SAFE regarding the restrictions for RQFII to launch products in jurisdictions other than its
registration location and the possibility for open-ended private funds to enjoy daily liquidity treatment after lockup period.
8
Open-ended private RQFII funds not allowed for daily
liquidity after lockup period
Under the current RQFII regulation, open-ended public funds
are allowed to conduct daily injection/ repatriation.
However, it is unlikely to extend the same liquidity treatment to
open-ended funds that are not sold to the public (e.g. private
funds) at the moment as indicated by SAFE.
9By China Asset Management (Hong Kong) Limited 9
RQFII SchemeA New Chapter of China Investment
November 2013
Confidential and not for onward distribution
10By China Asset Management (Hong Kong) Limited 10November 2013
Year of introduction: 2011
Allowing approved offshore financial institutions to use RMB funds sourced overseas to invest in domestic
markets
Effectively the RMB-version of the QFII scheme
Importance:
Opened up an important channel for RMB flowing back to the onshore asset market
Further confirmed Hong Kong's role as the offshore RMB centre
Increased availability and diversity of RMB-denominated products offshore
An important step in the eventual convergence in the onshore/offshore RMB markets
Indicated the government’s determination to internationalize RMB
RQFII Pilot ProgramBackground
*Source: SAFE, as of July 30, 2013
By China Asset Management (Hong Kong) Limited
11November 2013 By China Asset Management (Hong Kong) Limited
Item RQFII QFII
Injection and
repatriation
•Effectively use its RQFII quota within 1 year from the
day of RQFII quota approval
•Injection:
Open ended fund RQFIIs: no specific requirement
Other RQFIIs: fully inject the approved quota within
6 months upon quota approval.
•Repatriation:
Open ended fund RQFIIs can do fund
injection/repatriation on a daily basis, according to the
net difference between its subscription and redemption
each day.
Other RQFIIs can do fund injection/repatriation on a
monthly basis. RQFIIs need to provide audit reports
issued by domestic accounting firm and relevant tax
payment evidence if RQFIIs repatriate investment
gains.
•Injection:
Fully inject the approved quota within 6 months upon
quota approval.
•Repatriation:
For open ended China fund, a QFII is allowed to
repatriate principal or profit in the net amount of its
subscription and redemption funds in the preceding week
on a weekly basis, after lock-up period.
For non open ended China funds, principal and profit
repatriation can be made after the lock-up period. Pre-
approval by the SAFE is required for each repatriation.
Denominated
Currency RMB (No onshore FX conversion required) USD (Onshore FX conversion required)
RQFII vs QFII Structure Differences
Source: CSRC ,SAFE, HSBC and Citi
12November 2013 By China Asset Management (Hong Kong) Limited
Item RQFII QFII
Lock-up Period•Open ended fund: Not applicable
•Non open ended fund: 1 Year
•Open ended fund: 3 months
•Non open ended fund: 1 Year
Investment
restriction – quota
allocation
•No requirement, at RQFII’s discretion
•Not less than 50% investment quota has to invest in
onshore equities (A shares)
•No More than 20% investment quota can be invested in
cash or cash equivalents
Investment Scope•Same for QFII and RQFII
•Including Stocks, bonds, funds, warrants, IPOs, bond issuance and index futures
RQFII vs QFII Structure Differences
Source: CSRC ,SAFE, HSBC and Citi
13November 2013 By China Asset Management (Hong Kong) Limited
Implications of Investment Products
Friendlier liquidity terms to launch public funds
Wider investment scope in China domestic market
Faster process for quota increase
More investment options for offshore RMB
Cost efficiency
Example 1: ChinaAMC Select RMB Bond Fund
14November 2013 By China Asset Management (Hong Kong) Limited
Historical Performance*
Note: All fund statistics are as of September 30, 2013.
*NAV-to-NAV performance with dividends reinvested; The investment returns are denominated in RMB. US/HK dollar-based investors are therefore exposed to fluctuations
in the US/HK dollar /RMB exchange rate. Past performance is not a guide to future performance, future returns are not guaranteed. You should read the Fund’s
Explanatory Memorandum including details of risk factors, before subscribing the units of the Fund.
Portfolio Allocation
Asset AllocationNAV per share RMB 10.34
-1%0%1%2%3%4%5%6%7%8%9%
02/2012 06/2012 10/2012 02/2013 06/2013
ChinaAMC Select RMB Bond Fund 86.47%
9.38%2.12% 2.03%
Credit Products
Fixed Income Funds
Convertible Bonds
Cash
Portfolio holding limits
Fixed income: up to 100% for RQFII portfolio vs 50% limit for QFII
Daily liquidity for the fund
RMB, HKD, and USD share classes
No FX transaction cost at fund level if CNH given
CNH is remitted directly into China, automatically converting CNH to CNY at 1:1
RQFII Bond Fund Advantages
Use offshore RMB to invest
As of August, there were over 700 billion RMB in RMB deposits in Hong Kong
Provides higher yield and ability to subscribe and redeem freely
Trade interbank bond market in China
Directly invest in a large potential universe of onshore Chinese bonds with RMB 26 trillion in outstanding size which
provide investors with exposure to a wide range of issuers (governments, central bank, policy banks, and listed/non-listed
companies etc.)
90% of bonds trade in the interbank bond market, not on the exchanges
Daily liquidity and semi-annual distribution (subject to the discretion of the Manager)
15November 2013 By China Asset Management (Hong Kong) Limited
0
1
2
3
4
5
3M 6M 9M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 15Y
(%) Onshore China Government BondOffshore China Government BondCNH Deposit Rates
Onshore vs. Offshore RMB Bond Yields*Benchmark Yield Curves in Major Economies*
0
1
2
3
4
5
6
1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y
China (onshore) Germany U.S. Japan
Example 2: ChinaAMC CSI 300 Index ETF (83188.HK / 3188.HK)
16November 2013 By China Asset Management (Hong Kong) Limited
Source: Bloomberg, from January 01 2013 to October 31 2013
1 Perfomance of ChinaAMC CSI 300 Index ETF is calculated on NAV-to-NAV basis without dividend reinvested and denominated in RMB. US/HK dollar-based investors
are therefore exposed to fluctuations in the US/HK dollar /RMB exchange rate.
2 Source: Bloomberg; Performance of CSI 300 Index is calculated based on price return and denominated in RMB.
Uses allocated RQFII quota to directly invest into underlying basket
Daily liquidity for the fund for daily creation/redemptions
Same day execution of underlying basket
Trades in both RMB and HKD on secondary market. Primary market dealt in RMB
No FX transaction cost at fund level
CNH is remitted directly into China, automatically converting CNH to CNY at 1:1
Stock Code YTD TE Annualized TE
83188 0.11% 1.81%
82822 0.13% 2.12%
83100 0.16% 2.58%
83118 0.12% 1.83%
2827 0.33% 5.20%
2823 0.20% 3.16%
RQFII ETF Advantages
Use offshore RMB to invest
Index fund denominated in RMB but traded in dual currencies
Physical ETF through RQFII
Cost Effective – does not involve any derivatives or collateral cost
No Synthetic Replication – no counterparty risk on derivative issuers, no collateral requirement
Daily Creation/Redemption
17November 2013 By China Asset Management (Hong Kong) Limited
A-shares: RQFII ETF vs Synthetic ETF vs QFII Physical ETF
RQFII ETF’s advantages over synthetic ETFs and QFII ETFs:
Vs Synthetic ETF: Physical A-share underlying allows the ETF to have lower cost, no counterparty risk, and better performance
tracking.
Vs QFII Physical ETFs: RQFII scheme allows for daily repatriation and movement of capital allows for daily
creation/redemption. QFII ETFs have capital movement limits that delays creation/redemption of the ETF.
18August 2013 By China Asset Management (Hong Kong) Limited
RQFII Physical A-Share ETF Synthetic A-Share ETFs QFII Physical A-shares
ETFs
Underlying Instruments China A-Share Stocks
Derivative Instruments which
have China A-share exposure China A-share Stocks
QFII/RQFII Quota Provider ETF Manager Various Third Parties ETF Manager
Derivatives Counterparty
Risk No Yes No
Collateral Requirement No Yes No
Derivatives Costs No Yes No
Trading Currency RMB/HKD Various Various
Capital
repatriation/movement Daily N/A Weekly
RQFII Physical vs Synthetic vs QFII Physical
This material is strictly confidential and is for the intended Professional Investors only. The recipient of this material should not distribute it to any other person.
19November 2013 By China Asset Management (Hong Kong) Limited
Other Considerations
Tax provision
Derivatives instruments
Other fixed income instruments
Choice of service providers
Local capabilities
Risk Factors specific to RQFII A-share ETFs
Investment risk
Risks relating to the RQFII regime
RMB trading and settlement of Units risk
Dual Counter Risk
Risks relating to PRC
PRC tax risk
RMB currency risk
Government intervention and restrictions risk
New manager and reliance on the Investment Adviser risk
Tracking error risk
Reliance on market maker risk
Note: The above does not include all risks factors involved in investing in the ETF. Investors should read the ETF’s Prospectus and
Product Key Fact Statement in detail, including the risk factors, before investing in the ETF.
20By China Asset Management (Hong Kong) LimitedAugust 2013
This material is strictly confidential and is for the intended Professional Investors only. The recipient of this material should not distribute it to any other person.
Contact Information
China Asset Management (Hong Kong) Limited
Contact: Mr. Freddie CHEN
Title: Managing Director
Email: freddie.chen@chinaamc.com
Tel: (852) 3406 8613
Fax: (852) 3406 8500
General Email: HK_BD@chinaamc.com
Hotline: (852) 3406 8686
Address: 37/F, Bank of China Tower, 1 Garden Road, Hong Kong
21By China Asset Management (Hong Kong) LimitedAugust 2013
Contact: Mr. Curtis TAI
Title: Manager
Email: curtis.tai@chinaamc.com
Tel: (852) 3406 8611
Fax: (852) 3406 8500
This material is strictly confidential and is for the intended Professional Investors only. The recipient of this material should not distribute it to any other person.
3. Funds Passporting in Asia Pacific
Fifteen Markets, Eight Players, Three Schemes, One Objective
Stewart Aldcroft
CEO, CitiTrust Limited, Asia Pacific
Senior Advisor, Investor Services, Asia Pacific
Citi Securities and Fund Services
stewart.aldcroft@citi.com
Discussion Points
Hong Kong and China “Mutual Recognition”
What is it?
Who is involved?
Who is not?
When will it happen?
What can be done?
Two Asian Passports for Funds
What are these?
Who is involved?
Who is not?
When will it happen?
What can be done now?
23
Hong Kong/China Mutual Funds “Recognition”
What’s been said?
Alexa Lam (HK SFC) speech in Hong Kong 23 January
2013
“Blessing” of the CSRC
Two stage process. Stage One completed, Stage two is
“implementation”
Added to HK/China CEPA (Closer Economic
Partnership Agreement) in August 2013
Likely scenarios
Hong Kong funds in China
China funds in Hong Kong
Products
SFC only, initially
CSRC only from China
Investment restrictions
Use of derivatives
Appropriate skill set in place
Possible limitations
“Pilot scheme”?
Based on time and size issues?
Distribution
What are Chinese investors interested in?
Access to the big 4 banks is difficult
Will other fund distributors be allowed to develop
Will foreign banks be given the go ahead to distribute
funds in China
24
Hong Kong/China Mutual Funds “Recognition”
What we do know What we don’t know What needs to be known
Bilateral agreement between China and Hong
Kong, no changes to existing “Rules”
Will it be a “pilot” scheme with only a few initial
participants?
Timing, will there be “advanced notice” of
commencement?
Does not involve Taiwan, Singapore or
anywhere else
Will there be restrictions based on AUM, age
and size of fund, age of FMC, etc.?
Any secondary approval process in Hong Kong
and/or China?
Hong Kong domiciled, HK SFC Authorised
funds for HK
Are ETFs included and how? Who will be allowed to distribute?
China CSRC approved funds for China What restrictions on use of derivatives will be
placed?
How to gain support from key market
distributors?
No Hong Kong MPF, UCITS, Cayman or other
funds
How will Mainland funds be allowed into HK?
Will the SFC impose restrictions?
What fund types, markets, products will be
attractive to Mainland investors?
CSRC and SFC are in two stage discussions:
Stage 1: Mapping – Completed in July 2013
Stage 2: Implementation – On-going
Will hedge funds and alternative investment
funds be allowed?
Will RMB Share classes be allowed for these
and all other HK SFC Funds?
HK SFC Funds Authorisation Code allows a
wide variety of fund types
Can Fund of Fund products, managed in HK,
invested in UCITS be allowed? (Chap. 8)
When will OEICs (i.e. mutual funds) be allowed
in Hong Kong?
“Technical study” groups meeting in Beijing and
Hong Kong, regularly
Will this lead to a “Greater China Funds
Passport”?
Will the SFC allow new fund applications “on
spec” in parallel with these new recognition
developments?
Purpose is to facilitate cross-border fund
distribution between Hong Kong and China
As China does not have Trust Laws, and only
unit trusts can currently be domiciled in HK, how
will this work?
Will Chinese FMC in HK get priority on
processing of products?
Of the 1,850+ HK SFC authorised funds, less
than 300 currently qualify.
Will this replace QDII? Is it necessary to set up offices in both Hong
Kong and China?
“Mutual Recognition” added to CEPA 10 in
August 2013
How will tax on both the funds and the investor
be applied in China?
Will there be a need for operations management
in both Hong Kong and China?
25
Hong Kong/China Mutual Funds “Recognition”
What can be done now?
Create Hong Kong domicile funds
Use local Trustees, e.g. Cititrust Limited
Build a track record
Ensure organisation can meet the new criteria
Benefits of Hong Kong local funds
Use in MPF
Speed to Market
Lower costs
Not impacted by UCITS V & VI
Relatively simple products
Can enable regional specialities to be developed
RMB shares classes
Next steps
What to set up
How to set up
Where to set up
26
Asian Passports for Funds – Two Schemes
APEC Finance Ministers “Asia Region Funds Passport”
Announced 22 September 2013
Involves Australia, South Korea, Singapore and New Zealand
Expected implementation in 2016
Based on an ASIC initiative from 2008
ASEAN Capital Markets Forum “ASEAN CIS Framework for Cross-Border Offering of Funds”
Announced 2 October 2013
Involves Singapore, Malaysia, Thailand
Expected implementation in 2014
Based on a Singapore MAS initiative from 2012
27
Asian Passports for Funds – Scheme 1
APEC Funds Passport scheme (September 2013)
Involves Australia, South Korea, Singapore and New Zealand
What is known so far:
Limited details available to date, no “Terms & Conditions” issued
More focused on export of funds from Australia and Korea than on import
Fundamental problems on fund importation in Australia and Korea
However:
Named: “Asia Region Funds Passport”
First stage – Joint Public Consultation in 2014 (on Rules and Arrangements)
Next – Each market allowed to decide whether to participate (or not)
Launch – Scheduled for 2016
September 2013, APEC announces ARFP
January to June 2014, public consultations in
countries
July to December 2014, technical and procedural
rules to be developed
February 2015, Arrangement Document
to be signed by participating countries
February to December 2015, pilot group
countries to implement domestic regulations
January 2016, commencement of
ARFP Passport
28
Asian Passports for Funds – Scheme 2
ASEAN Capital Markets Forum (October 2013)
Countries involved – Singapore, Malaysia, Thailand
Have issued “Standards of Qualifying CIS) (Collective Investment Schemes)
CIS Operators (Fund managers) to have:
Minimum 5 year history
Minimum US$500m in AUM
Funds to have limitations on FDI
Target implementation in 1H2014
Standards Required of Qualifying CIS
Minimum AUM to Qualify US$500m
Minimum Track Record 5 years
Fund Management delegation limit 20% NAV
Investment in transferable securities, money market
instruments, deposits, units in other CIS, and financial
derivatives
Allowed
Securities lending, repurchase transactions, direct
lending of monies
Not Allowed
29
Three Funds Passports – but which one(s) will work?
Hong Kong and China “mutual recognition”
Is Regulator-to-Regulator with Government support
Fund industry highly motivated by the opportunity
Could start in late-2013 or early-2014
APEC Finance Ministers “Asia Region Funds Passport”
Is Finance Minister led
Long delay to implementation
Designed to export funds, not import
Involves large mutual fund markets (Australia, Korea)
Is Singapore really involved?
ASEAN-led “ASEAN CIS Framework for Cross-border Offering of Funds”
Is Regulator-led, with clearly defined terms published
Scheduled to start in 1H2014
More likely to benefit local fund managers than global
Domestic mutual fund markets are relatively small by comparison
Also worth noting:
Singapore has a foot in two camps
No participation (yet) by Japan, Taiwan, Indonesia, The Philippines, Vietnam, India, Sri Lanka
How will global fund managers react?
30
Will Asian Funds Passport Schemes impact product development?
In Hong Kong – Yes
Introduction of RMB denominated products
Global fund managers creating local funds
Possibly simpler investment themes
Less use of derivatives
Will likely reduce influence on and of UCITS
In China - ?
Local fund managers in China have not yet been allowed to invest globally, except via QDII
Elsewhere
Too early to tell
31
Appendix: Introduction to ChinaAMC
November 2013 32By China Asset Management (Hong Kong) Limited
33By China Asset Management (Hong Kong) Limited 33By China Asset Management (Hong Kong) LimitedNovember 2013
ChinaAMC: A Leading Asset Management Firm in China
China Asset Management Co., Ltd. (“ChinaAMC”)
Established in 1998
The largest mutual fund manager in China*
• Total assets under management and advisory by ChinaAMC
Group was RMB 344.77 billion (USD 56.17 billion) as of June 28,
2013 **
*Source: Wind, as of June 28, 2013, in terms of mutual funds AUM of RMB 230.72billion
**Source: ChinaAMC and CAMHK
China Asset Management (Hong Kong) Limited
(“CAMHK”)
Established in September 2008 as a wholly-owned subsidiary
of ChinaAMC
Aims to strategically develop the offshore business and
investment capabilities.
Represents ChinaAMC’s strategic move to expand its overseas
activities by:
• Serving as an integral part of ChinaAMC’s overseas
investment and research team
• Providing international clients with investment products and
services
Currently offers the following strategies to overseas investors:
• China A-shares
• Offshore Chinese equities
• China equity absolute return
• China fixed income
• Index product (ETF)
^Source: Wind
Top Five Fund Management Companies in China^
by Mutual Funds AUM as of June 30, 2013
Ranking Fund Companies
Fund AUM
Market Share(RMB
billion)
1 ChinaAMC 230.72 9.29%
2 Harvest 148.87 6.00%
3 E-Fund 129.10 5.20%
4 Southern 125.67 5.06%
5 Bosera 110.21 4.44%
34
1998: One of the first 3 fund management companies established
in China
1999: Launched one of China’s first enhanced index funds
2001: The first and only fund manager approved by the National Council for Social Security Fund to
manage pension funds in a pilot program
2002: Selected to manage the National Social Security Fund portfolios as one of the
first 6 qualified fund management companies
2004: Launched China’s first ETF: the China 50 ETF
2002: Launched China’s first pure bond fund
2005: Licensed to manage corporate annuities among the first
batch of fund management companies
2005: Designated by EMEAP (comprised of eleven central banks and monetary
authorities in the East Asia and Pacific region) as the sole manager for ABF China Bond
Index Fund
2007: Launched one of China’s first QDII funds
2008: Licensed to manage separate account
2009: Launched offshore funds by CAMHK
2010: Launched UCITS funds by CAMHK
2011: Launched China’s first bond index mutual fund
By China Asset Management (Hong Kong) Limited
2012: Launched one of the first RQFII bond funds and
the first RQFII ETF by CAMHK
November 2013
ChinaAMC GroupThe Industry Pioneer in China
2013: Launched the first batch of sector index
ETFs in China
35
Best Fund Management Company
Shanghai Securities News, Morningstar
2006, 2007, 2008,
2009, 2010, 2011
Fund House of the Year -
China
AsianInvestor
2004, 2007, 2008,
2009, 2010, 2013
China Best Branded ETF
Asia Asset Management
2010
No.1 of China’s
Top 20 Money Managers
Institutional Investor
2008, 2009, 2010, 2011, 2012
By China Asset Management (Hong Kong) Limited
Fund House of the Year -
China Offshore
AsianInvestor
2012
Golden Bull Fund Management Company
China Securities Journal
2006, 2007, 2008,
2009, 2010, 2011
November 2013
ChinaAMC GroupAwards & Recognition
Most Innovative ETF-Asia Pacific
(ChinaAMC CSI 300 Index ETF)
The 9th Annual ETF Global Award (2013)
This presentation is intended for information and internal training purposes only. Please do not distribute to any end investors.
By China Asset Management (Hong Kong) Limited 36August 2013
Important Information:
•ChinaAMC CSI 300 Index ETF (the “Fund”) is a passively managed exchange traded fund (“ETF”) and is traded on the Stock Exchange of Hong Kong (“SEHK”) like stocks. The
investment objective is to provide investment result that, before fees and expenses, closely corresponds to the performance of the CSI 300 Index (the “Index”). The Fund invests in
the PRC’s domestic securities market through the Manager’s status as a RMB Qualified Foreign Institutional Investor (“RQFII”) and the RQFII quota obtained by the Manager on
behalf of the Fund.
•The Fund is subject to concentration risk as a result of tracking the performance of a single geographical region (the PRC).
•The RQFII policy and rules are new and there may be uncertainty to its implementation and such policy and rules are subject to change, such changes may also have potential
retrospective effect.
•Repatriations by RQFIIs in respect of fund such as the Fund conducted in RMB are permitted daily and are not subject to any lock-up periods or prior approval. There is no
assurance, however, that PRC rules and regulations will not change or that repatriation restrictions will not be imposed in the future. Any new restrictions on repatriation of the
invested capital and net profits may impact on the Fund’s ability to meet redemption requests.
•Investing in emerging markets, such as the PRC, involves a greater risk such as greater political, tax, economic, foreign exchange, liquidity and regulatory risks.
•There are risks and uncertainties associated with the current PRC tax laws, regulations and practice in respect of capital gains realised by RQFIIs on its investments in the PRC
(which may have retrospective effect). The Manager will at present make a provision of 10% for the account of the Fund in respect of any potential tax liability on capital gains. In
case of any shortfall between the provision and actual tax liabilities, which will be debited from the Fund’s assets, the Fund’s asset value will be adversely affected.
•The Fund is denominated in RMB. RMB is currently not freely convertible and is subject to exchange controls and restrictions. There is no guarantee that the value of RMB against
the investors’ base currencies (for example HKD) will not depreciate.
•In the event of any default of either a PRC broker or the PRC Custodian (directly or through its delegate) in the execution or settlement of any transaction or in the transfer of any
funds or securities in the PRC, the Fund may encounter delays in recovering its assets which may in turn impact the NAV.
•The Fund is not “actively managed” and therefore, when there is a decline in the Index, the Fund will also decrease in value. The Manager will not adopt any temporary defensive
position against any market downturn. Investors may lose part or all of their investment.
•Due to fees and expenses of the Fund, liquidity of the market and different investment strategies adopted by the Manager, the Fund’s return may deviate from that of the Index.
•The units of the Fund are traded on the SEHK. The prices on the SEHK are based on secondary market trading factors and thus the Fund’s market prices on the SEHK may deviate
from the net asset value.
•You should not make any investment decision solely based on the information on this material alone. Please read the relevant offering documents for details including the risk
factors before making any investment decisions. If necessary, seek independent professional advice.
CSI Disclaimer
The CSI 300 Index (“Index”) is compiled and calculated by China Securities Index Co., Ltd. (“CSI”). All copyright in the Index values and constituent list vest in CSI.CSI will apply all
necessary means to ensure the accuracy of the Index. However, CSI does not guarantee its instantaneity, completeness or accuracy, nor shall it be liable (whether in negligence or
otherwise) to any person for any error in the Index or under any obligation to advise any person of any error therein.
This material is strictly confidential and is for the intended Professional Investors only. The recipient of this material should not distribute it to any other person.
By China Asset Management (Hong Kong) LimitedAugust 2013
Disclaimer
Investment involves risk. Past performance is not indicative of future performance, future return is not guaranteed. The price of the Fund’s units may go up as well as down and a
loss of your original capital may occur. This material is for informational purposes only and does not constitute an offer or solicitation of any transaction in any securities, nor does it
constitute any investment advice. It expresses no view as to the suitability of any investments described herein to the individual circumstances of any recipient. You should read the
Fund’s Prospectus upon its official publication for details of the Fund including the risk factors. If necessary, you should seek independent professional advice. You should not
invest in the Fund unless the intermediary who sells the Fund to you has advised you that the Fund is suitable for you and has provided explanation of such advice.
This material has been prepared and issued by China Asset Management (Hong Kong) Limited and has not been reviewed by the Securities and Futures Commission.
Disclaimer
37
This material is strictly confidential and is for the intended Professional Investors only. The recipient of this material should not distribute it to any other person.
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