JPMorgan is reportedly preparing to launch its first qualified domestic institutional investor (QDII) fund to invest Chinese clients' money in overseas securities markets.
“We are actively preparing to launch a fund for overseas investment. We have been making preparations in terms of staffing and equipment,” Mandy Wang, chief executive officer of China International Fund Management Co, JP Morgan's asset management venture in China , told Reuters.
Wang did not disclose the size and timing of the planned fund, but said it would be a main focus of her company in the second half of this year.
Despite its poor uptake so far, China's government is keen for the QDII scheme, introduced last year, to succeed to help cool off its overheating economy.
It has taken measures to discourage more funds flowing into the country – including the recent reductions on tax rebates for exporters – while encouraging outflows via initiatives such as the QDII programme.
Earlier this month QDII was revamped in a bid to encourage more domestic investors to look overseas.
Under the new rules, mainland brokers and fund managers are allowed to invest client funds in racier products like foreign equity markets and derivatives.
Previously, the investment universe was limited to foreign fixed-income products and the appreciation of the yuan ate into the meagre returns from such products for yuan-denominated investors. Since it was revalued in mid-2005, the yuan has appreciated more than 7% against the dollar.
China International Fund Management (CIFM) is a JV between JPMorgan Asset Management and Shanghai International Trust & Investment Co. (SITICO). It is now one of the biggest Sino-foreign fund houses, and is ranked third in assets under management, according to Z-Ben Advisors.
More on QDII in these EngagingChina stories.