Extending leadership position in Asia Fixed Income with strategic intent to provide access to domestic capital markets in China
Singapore's first China Onshore Bond Fund is being launched by Nikko Asset Management (Nikko AM) in partnership with the Bank of China and DBS Bank, following Nikko AM's one-billion Renminbi quota award for the fund as a Renminbi Qualified Foreign Institutional Investor (RQFII), the company announced today. The fund is expected to launch in mid-July.
"We are elated to be pioneering the Nikko AM China Onshore Bond Fund," said Eleanor Seet, President of Nikko Asset Management Asia. "The fund is strategically significant as a long-term proposition supporting Singapore's role as a key offshore RMB centre. We take pride in being a forerunner in RMB internationalisation by providing investors with direct access to China onshore bonds, which are not readily accessible to foreign investors."
"This is the first in a suite of RQFII solutions we are planning to provide. We expect allocations into this market from both local and global investors to grow, especially with a long-term positive outlook on the currency," Seet added.
The development builds on Nikko Asset Management's successful track record of managing Asian bonds and credit over the last 30 years. In particular, it was one of the first fund managers to launch an offshore RMB bond fund shortly after the liberalisation of the Chinese bond market in November 2010. With a sizable presence in the market, the firm has exceptional access to new Asian bonds allocations and inventories in the secondary market.
"We are pleased to partner Nikko AM on the Nikko AM China Onshore Bond Fund. While there is generally strong interest in bonds in Singapore, there are limited RQFII allocations available to offshore investors. Such bond funds will provide investors with the opportunity to participate in China's growth and add diversification to their portfolio," said V Arivazhagan, Managing Director & Head, Regional Investment & Treasury Products, Consumer Banking Group, DBS Bank.
Wang Lei, Assistant General Manager, Bank of China Singapore Branch, said, "Bank of China is honoured to be one of the first banks in Singapore to distribute the inaugural RQFII fund to be launched here, and to have played a crucial role in Nikko AM obtaining the RQFII quota and status approval. We are one of the largest custodian banks in China, and the winner of the Custody Specialist Award for RQFII Custodian in The Asset Triple A Asset Servicing Awards 2014. This milestone collaboration with Nikko AM in Singapore taps on our strong foothold in China and further reinforces our position as the leading provider of RMB wealth management products in Singapore."
The Nikko AM China Onshore Bond Fund, subject to regulatory approval, is designed for retail investors seeking a total return of capital growth and income over the medium to long term through exposure to RMB and listed and unlisted RMB denominated fixed income instruments.
The fund will invest primarily in a portfolio of RMB denominated certificates of deposits, preferred shares, fixed and floating bonds, convertible bonds, notes, bond and money market funds and other fixed income instruments issued onshore in the People's Republic of China by governments, quasi-government entities, corporations and financial institutions.
Investors can invest in RMB through the Bank of China and DBS Bank when the fund, upon obtaining regulatory approval, becomes available in mid-July.
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