BNPP IP seeks landmark Paris RQFII licence
BNP Paribas Investment Partners (BNPP IP) has applied for a licence under the renminbi qualified foreign institutional investor (RQFII) scheme, which allows direct access to Chinese securities.
This move follows on the heels of the RQFII scheme being extended to Paris last month, with China’s securities regulator saying on June 20 it was accepting licence applications. London was the first European city to receive quota; it did so in October, since when two firms have obtained licences under the programme.
BNPP IP filed the application with the China Securities Regulatory Commission (CSRC) late last month. A licence would boost capacity to access Chinese equities and provide a “bridge to clients to invest in a growing economy”, said Daniele Tohmé-Adet, Paris-based head of external distribution specialists.
HFT Investment Management, BNPP IP’s joint venture with Haitong Securities in Hong Kong, already has an RQFII licence and a quota of Rmb4.4 billion.
As of the end of June, Ashmore was the only UK asset manager to have been awarded an RQFII quota, amounting to Rmb3 billion. BlackRock obtained a licence last month and has also applied for quota.
Though participation in the UK’s RQFII scheme has been lacklustre to date, Tohmé-Adet holds a positive view of the programme, noting that French investors are interested in Chinese equities and corporate credit. As they have turned more selective, investment funds based on deep analysis and stock picking would be well received, she added.
While equity allocations used to be made to China’s market as a whole, today they are increasingly being made to specific sectors, such as banking, telecoms, real estate, technology and consumer durables, Tohmé-Adet noted. European investors are less keen on real estate and banking.
Slowing RMB appreciation and increased volatility have not dampened investor interest in China because reform is seen as driving the currency, she said. Investors continue to like corporate bonds as they seek higher yields and think the renminbi will appreciate in the long run, she added.
According to French association Europlace, Paris has renminbi deposits totalling Rmb20 billion. That compares to Rmb14 billion in London as of end-2013, according to City of London data.
Singapore overtook the English capital in terms of RMB payment volumes in March, according to recent figures from financial messaging provider Swift. Singapore accounts for 6.8% of the total amount and London 5.9%, as of March; those two cities stand second and third globally behind Hong Kong, which accounts for 72.4%.