China Based Fund Managers Expand To Hong Kong To Seek Investing Opportunity In Dollar

By: Asia Business Outlook Team | Thursday, 20 April 2023

Large China-based fund managers are opening shop in Hong Kong for the first time, hoping to satisfy Chinese investors' thirst for US dollar-based products and foreign exposure now that the country's borders have reopened.

The entry of China-based funds into Hong Kong began last year, when China eased years of COVID-19 restrictions and high-net-worth Chinese families were finally permitted to travel and diversify investments in search of higher returns.

According to a tally based on sources and public information, at least eight mainland-based funds, including billion-dollar yuan quant funds, equities funds, and mutual funds, have established operations in Hong Kong in the last six months, with more than ten others on the way.

Most of them are rapidly building offshore sales and research teams and preparing for the launch of their first U.S. dollar funds. As mainland-based funds are yuan denominated, fund managers need to set up in Hong Kong to be able to offer foreign currency products.

One of those firms, Beijing-based Ren Bridge Asset Management, which manages 17 billion yuan ($2.5 billion), opened an office in Hong Kong in March and is in the process of applying for an asset management license there.

The fund, which has delivered annualised returns of 21% since 2017, has launched an offshore fund with a long-bias equity strategy, primarily targeting Ren Bridge's current clients with funds abroad, including corporates and family offices.

The foreign operations will be overseen by Xue Youwei, the former chief financial officer of Lion Fund Management.

"We are bullish on Hong Kong as a global asset management hub." "Through offshore funds, we hope to broaden our investment scope, investigate hedging strategies, and learn from excellent overseas peers," Xue explained.