After a two-year wait, Chinese regulators have revived a programme allowing global asset managers including JPMorgan Chase to raise funds from Chinese onshore clients for investment in offshore hedge funds.
The easing of capital controls shows how Chinese regulators are increasingly relaxed about cross-border capital flows amid a stable Chinese economy and persistent dollar weakness.
JPMorgan Asset Management has received a new quota for the programme, and several other asset managers are expecting similar allotments, according to three people familiar with the situation. JPMorgan received a $50m quota in January, one of those people said.
BNP Paribas Asset Management is expecting approval for a quota from the State Administration of Foreign Exchange, another person said.
The outbound investment programme for so-called Qualified Domestic Limited Partners, or QDLPs, was launched in 2013 but informally halted in 2016 as China’s foreign exchange regulators grew concerned about capital flight and renminbi depreciation.
Chinese policymakers are preparing market opening measures in securities, insurance and fund management to appease US trade warriors. Though the QDLP relaxation predates the recent outbreak of US-China trade tension, the quotas will be welcomed by western fund managers eager to win greater access to the Chinese market after years of incremental opening.
The controls on capital flight remained tight throughout 2017 as many global asset managers such as Alliance, Aberdeen Standard Investments, BNP Paribas Asset Management and Och-Ziff waited for news on the restart of the once highly anticipated programme.
Source: FT.com
