Published by Asia Asset Management – 19th Nov 2018
China Asset Management Co.’s (ChinaAMC) Hong Kong unit has teamed up with Malaysia’s RHB Group Asset Management to introduce a shariah-compliant China fund as the Chinese firm seeks to tap the potential of the fast-growing Islamic investment market.
The new RHB Shariah China Focus Fund was launched on November 15. This is the first A-shares focused shariah fund in Malaysia and it kicks off ChinaAMC (HK)’s move into the Southeast Asian asset management market, according to a company spokesman.
The fund will invest in a mix of shariah-compliant China stocks, including A-shares and H-shares, as well as Islamic real-estate investment trusts, Islamic exchange-traded funds, and shariah-compliant equity-related securities, ChinaAMC (HK) says in a statement on November 16. It will also invest in assets such as Islamic money market instruments, Islamic deposits with financial institutions, and Islamic collective investment schemes.
A-shares are stocks of Chinese companies listed on the Shanghai or Shenzhen exchanges. H-shares are stocks of Chinese companies listed on the Hong Kong stock exchange.
According to ChinaAMC (HK), the rapid growth of Islamic finance and rising demand in the Islamic world for Chinese investments mean that the partnership with RHB Group Asset Management can “provide investors a broader hunting ground to capitalise on the opportunities available in China”.
Malaysia, which has a majority Muslim population, is a pioneer in the development of an Islamic capital market and has a well-developed Islamic finance industry.
A spokesman for ChinaAMC (HK) tells Asia Asset Management that the new fund is the company’s first in Southeast Asia and “marks the start of our business penetration into the region”.
“We are going to have more shariah products offered in the region in early 2019,” he says.
Raymond Jing, a portfolio manager at ChinaAMC (HK) is the adviser for the new fund.
“The current valuation of China equities has reached a historical low level, which is very tempting especially for some of the sector leaders with strong year-on-year (earnings per share) growth,” Mr. Jing says in the statement. “Together with the ongoing inclusion of A-shares into global indices, it presents various opportunities and good timing for investors.”
RHB Group Asset Management, a wholly-owned subsidiary of Kuala Lumpur-based RHB Investment Bank Berhad, had approximately US$11.9 billion of total assets under management (AUM) at the end of September 2018.
ChinaAMC (HK) had AUM of around $7.2 billion as of June 2018.
