BIZCHINA / News
ICBC raises $585m in China's largest QDII fund
(Bloomberg)
Updated: 2007-07-03 08:18
Industrial & Commercial Bank of China Ltd., the nation's biggest
financial services company, raised 4.45 billion yuan ($585 million) for
the country's largest fund that allows local investors to buy securities
abroad.
Industrial & Commercial, also known as ICBC, completed the sale of
China's first equity fund under the qualified domestic institutional
investor (QDII) program on June 29, the Beijing-based bank said in a
statement today. It plans another fund specializing in stocks abroad this
month.
China has struggled to attract money under the QDII program because its
soaring stock markets make investment abroad less attractive. Chinese
investors are opening brokerage accounts at a rate of about 300,000 a day
this quarter, helping the CSI 300 Index to the second-biggest gain among
90 benchmarks tracked by Bloomberg.
The CSI 300 is valued at 41 times the reported earnings of its member
companies, about twice as much as indexes in Japan and India, Asia's next
most expensive markets.
Banks were allowed to invest in overseas shares from May 14, extending
from fixed-income and money-market products previously, as the government
tried to cool the local stock market by diverting funds elsewhere.
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ICBC's open-ended fund will invest half of its assets in China-related
stocks in Hong Kong and the other half in high-yield bonds and
money-market products across Asia to hedge against appreciation of the
yuan, the bank said.
Investors must put in at least 300,000 yuan into the fund. JP Morgan
Fleming Investment Management Inc will help the Chinese bank manage the
portfolio.
Banks need to offer more investment products to bolster fees and reduce
their reliance on lending, Li Fuan, director of product innovation at the
China Banking Regulatory Commission, said in June. About 40 percent of
China's household savings is held in bank deposits, with people saving
for retirement, health care and education, and about the same is held in
investment and insurance products in more developed markets, he said.
Of the $15 billion in QDII quota allotted since the program started a
year ago, only 6 percent has been filled, according to the banking
regulator. ICBC has been granted a quota of $2 billion.
(For more biz stories, please visit Industry Updates)
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