Aberdeen Asset Management Asia (AAMAL) has been awarded a Renminbi Qualified Institutional Investor (RQFII license) by the China Securities Regulatory Commission.

 

Aberdeen applied for 600 million renminbi investment quota and expects the actual sum to be confirmed by SAFE in November. Once 80% of the allocation is invested, it may apply for an additional quota.

 

With the award, Aberdeen plans to launch a China A share fund. This will be marketed globally to institutions such as private banks and discretionary fund managers, at first those in Europe.

 

The award is the company’s first RQFII license and follows the award of a QFII license in July 2010, with US$200 million being granted in October of that year (with a further US$55 million this July). Aberdeen uses that license to invest in both onshore domestic fixed income securities and equities.

 

The launch of an A-share fund represents a gradual shift in the company’s view of Chinese equities. Since 1997, it has managed a China equity fund that is characterized by its big weighting in Hong Kong and other non-mainland domiciled stocks.

 

But in recent years, Aberdeen’s Hong Kong-based China equities team, which is an integral part of the regional team based in Singapore, has identified more mainland companies whose business clarity and governance structures meet its quality thresholds.

 

Aberdeen is confident the A-share fund will attract interest from both existing and clients who, for internal policy or other reasons, want direct access to China but want to invest conservatively and are not looking to time the market.

 

The A-share market offers exposure to sectors that may not be accessible in the smaller H share market. They include consumer, travel, healthcare and financial services, where state-owned enterprises are less dominant.