The first batch of fund raising in the ‘mini-QFII’ project, which allows Chinese asset managers to launch products that target the pools of renminbi held in Hong Kong, has made a rocky start.
Guotai Junan International, a Chinese fund manager, said it would extend the subscription period for its Renminbi Qualified Foreign Institutional Investor (RQFII) product and up to six other issuers may find themselves in similar situations, Z-Ben Advisors, a Shanghai-based asset management consultancy said.
RQFII was formally approved in December of 2011, and the current trial program has a total quota of RMB 20bn.
Z-Ben and other analysts had predicted a significant amount of outstanding demand for offshore asset management by holders of the currency in Hong Kong.
One reason behind this could be that Hong Kong banks have increased their deposit rates in competition with RQFII. In one case the rate went from 0.5% to 2.25%.
“While still below the 3.5% available in Mainland interbank markets, with additional fees, many investors may have felt that participating in the pilot program was simply not worth the effort,” Z-Ben said.
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