Black­Rock li­censed to in­vest fur­ther in China us­ing yuan

China Daily (Canada) - - ACROSSAMERICA - By XIE YU in Shang­hai xieyu@chi­nadai­

Chi­nese au­thor­i­ties have given the world’s big­gest as­set man­ager, Black­Rock Inc, a ren­minbi qual­i­fied for­eign in­sti­tu­tional in­vestor li­cense, which means the firm can in­vest di­rectly on the main­land us­ing off­shore yuan.

The move also fur­ther opens China’s cap­i­tal mar­kets and in­ter­na­tion­al­izes its cur­rency.

The li­cense was awarded to Black­Rock As­set Man­age­ment North Asia Ltd, the New York Stock Ex­change­listed par­ent com­pany said on Tues­day.

Black­Rock will ap­ply for a quota to de­ter­mine how much money can be in­vested. “We ap­plied for an RQFII li­cense be­cause China is an im­por­tant in­vest­ment des­ti­na­tion for our clients glob­ally,” a Black­Rock rep­re­sen­ta­tive said.

The com­pany re­ceived a qual­i­fied for­eign in­sti­tu­tional in­vestor quota of $100 mil­lion in June 2012 and ap­plied for the sec­ond quota later that year.

The QFII pro­gram is a sep­a­rate in­vest­ment sys­tem un­der which in­vestors use other cur­ren­cies, such as Hong Kong or US dol­lars, to trade A-share stocks.

The rep­re­sen­ta­tive said each of Black­Rock’s two QFII quo­tas was for $100 mil­lion and that both are in­vested,

“The ex­pan­sion of the RQFII pro­gram will widen the off­shore yuan’s in­vest­ment chan­nels, which is in line with the govern­ment’s de­ter­mi­na­tion to pro­mote” the cur­rency for in­ter­na­tional use, Li Jianfeng, a strate­gist with Caida Se­cu­ri­ties Co Ltd, said.It also helps sta­bi­lize the stock mar­ket, es­pe­cially blue chips, be­cause for­eign in­vestors usu­ally fa­vor long-term value in­vest­ment, he said.

Last month, China re­laxed the rules so as to al­low QFII and RQFII in­vestors ac­cess to more prod­ucts and in­vest up to 30 per­cent in a sin­gle com­pany, up from 20 per­cent.

At the end of Fe­bru­ary, China had is­sued to­tal quo­tas of $53.58 bil­lion un­der the QFII pro­gram and 200.5 bil­lion yuan ($32.5 bil­lion) un­der the RQFII pro­gram, ac­cord­ing to the State Ad­min­is­tra­tion of For­eign Ex­change. The bench­mark Shang­hai Com­pos­ite In­dex slid 0.3 per­cent to 2,095.71 points on Thurs­day as in­vestors weighed the most re­cent eco­nomic sta­tis­tics. China’s econ­omy grew 7.4 per­cent in the first quar­ter, down from 7.7 per­cent in the pre­vi­ous three months. Ex­pec­ta­tions were for 7.3 per­cent.

Slow­ing growth of M2 — the broad mea­sure of money sup­ply — in March sug­gested con­tin­ued eco­nomic weak­en­ing.

Val­u­a­tions of some sec­tors such as real es­tate that tra­di­tion­ally have been con­sid­ered to be blue chips are near his­toric lows and rated as bar­gains by some an­a­lysts.

The lat­est eco­nomic fig­ures point to sta­bi­liza­tion, if not growth, with con­sump­tion tak­ing over as the main driver from in­vest­ment and ex­ports, said Dale Ni­cholls, a Tokyo-based port­fo­lio man­ager at Fidelity Funds-Pa­cific Fund.

Look­ing at val­u­a­tions across a range of sec­tors, which in many cases are near his­toric lows, it does seem that many of these risks are priced into the mar­ket. So, over­all I am con­fi­dent about China’s out­look,” he said.


Chair­man and Chief Ex­ec­u­tive of Black­Rock Lau­rence Fink speaks dur­ing a ses­sion at the World Eco­nomic Fo­rum (WEF) in Davos this Jan­uary in a file photo.

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