Investors continue to focus on Chinese GDP numbers while ignoring significant steps being made in opening up the country’s capital account and the encouragement of outbound investment, says AXA Investment Managers.
In a weekly update, AXA Investment Managers fund manager Mark Tinker said while investors are focusing on Chinese economic data, the opening up of the country's capital count is being ignored.
China is looking for the private sector to play a greater role in recycling the country's current account surplus. The Chinese government is not looking to stop capital outflows, only regulate them, said Mr Tinker.
“Going forward, they want greater private sector retention and recycling as the capital account opens up,” he said.
According to Mr Tinker, while the government had previously placed an emphasis on inward investment, there is now a shift towards outbound investment.
“Increasingly they are enhancing Qualified Domestic Institutional Investors (QDII) and Renminbi Qualified Domestic Institutional Investors (RQDII), quotas for outbound investors, allowing companies to develop products for onshore Chinese investors to invest offshore.
"In particular they are combining the Free Trade Zone (FTZ) with a new [overseas investment scheme] QDII2 to offer a huge opportunity for Chinese high-net-worth individuals to invest offshore.
“This is very important for western financial institutions looking to tap into China’s huge domestic savings base,” he said.
Mr Tinker said this opportunity was made clear with Chinese President Xi Jinping’s visit to the UK last week.
According to Mr Tinker, the UK is looking to capitalise on China’s shift to a services-based economy, with the services sector now making up approximately 80 per cent of the growth in China’s GDP.
Mr Tinker said the QDII and RQDII illustrates that countries like the UK can provide a variety of investment options and products for Chinese investors.
Perpetual Investment has recorded net outflows of $1.1 billion for the fourth quarter of 2019, while its funds under management fell by $300...
The RBA has revealed the factors behind the July cash rate decision and has left the door open to further changes in the near term. ...
HESTA has posted its investment returns to members for the 2018-19 financial year, which it said were above the target objective. ...