Global fund launches fly in China as yuan slumps

Principal Financial

30/05/2024 08:04

By Summer Zhen and Samuel Shen
       HONG KONG, May 30 (Reuters) - Global fund launches in
China have hit a record as a weakening yuan and fragile economy
drive demand for foreign assets, in the latest sign of low
confidence among domestic investors.
    Eleven funds issued under the Qualified Domestic Limited
Partner (QDLP) programme have been launched so far this year,
according to data by Z-Ben Advisors, already outpacing the
full-year number from any previous year.
    Managers such as Blackstone, Bridgewater Associates, and
Oaktree Capital Management have opened funds, though they have
not disclosed total fundraising.
    The products, which raise money from high net worth and
institutional investors and invest in overseas assets, are
booming as Chinese markets flounder. The yuan  CNY=CFXS  is at
six-month lows on the dollar, the stock market shows signs of
fatigue after a rebound from 5-year lows struck in February and
benchmark 10-year government bond yields have hit record lows.
    "Investors' demand for offshore products have been rising
quickly this year due to a weak yuan and sentiment," said Ivan
Shi, head of research at Shanghai-based Z-Ben Advisors, adding
alternative investments and foreign bonds are popular.
    In April, Blackstone  BX.N  launched its first QDLP fund,
channeling money to the firm's Private Equity Strategies fund.
    The initial sales target of $40 million was reached in less
than two weeks, according to two people familiar with the
matter. Blackstone declined to comment.
    Hedge fund giant Bridgewater has also set up an outbound
fund this year, according to official data.
    Another newcomer, U.S. asset manager Principal Financial
Group, has rolled out a data centre fund, while Oaktree, abrdn
and UBP are among firms that issued global bond funds.
    Introduced in 2012, QDLP funds supplement other outbound
investment channels in China.
    To be sure, the sums involved remain small relative to
China's capital markets and outflow is controlled because the
fund size is capped and they operate in a closed loop, similar
to the Stock Connect scheme. Sellers' cash is returned to them
in China.
    Market participants say Chinese authorities are largely
encouraging the sector and that more products are on the way.
    U.S. managers VanEck and Rayliant Global Advisors are
currently applying for QDLP licences.
    "As a foreign manager, getting QDLP approval seems much
easier than before," said Rayliant's chief investment officer,
Jason Hsu. 

 (Reporting by Summer Zhen and Samuel Shen; Editing by
Jacqueline Wong)
 ((summer.zhen@thomsonreuters.com; 852-3462-7739;))