Tue, Sep 23, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

China relaxes hurdles for foreign boutique managers and expands permitted offshore investments for insurers

Friday, November 23, 2012
Opalesque Industry Update - On 22 October 2012, the China Insurance Regulatory Commission (CIRC) issued the long-awaited Implementation Measures to the Provisional Measures for the Overseas Investment with Insurance Funds (Implementation Measures).

The Implementation Measures introduce two significant developments. First, they specify the qualification requirements for a "Foreign Delegated Person" licence which is needed to manage the offshore investments of China’s insurance funds. Prior to the issuance of the Implementation Measures, the qualification requirements, particularly in relation to assets under management (AUM) of a foreign manager, were not spelled out. As a result, the CIRC had not issued a "Foreign Delegated Person" licence for some years. Under the new measures, the AUM of the foreign manager’s group companies may be aggregated to fulfil the AUM requirements. Also, there are relaxed rules for foreign managers, known as boutique managers, who specialize in certain asset classes. The Implementation Measures open the door for global asset managers to obtain a licence to manage China’s insurance mandates.

The second significant development is the extensive expansion of the permitted offshore investments for insurance funds, both in terms of products and markets. Before the Implementation Measures, insurance funds could only invest in certain stocks and bonds issued or listed in Hong Kong. Insurers in the PRC can now invest in 45 of the world’s markets. The permitted investment products now cover money market products, fixed income products, equities including unlisted stocks in various industries, real estate, securities investment funds, private equity funds, REITs, and derivatives for hedging purposes. A securities investment fund is a permissible investment if it meets certain requirements such as having been approved by or registered with the securities regulatory authority in one of the 45 markets, having a track record of at least three years, and its manager meeting the requirements applicable to the "Foreign Delegated Person".

The Implementation Measures are expected to result in a significant amount of insurance funds being channelled to offshore markets. Under the new rules, a PRC insurer is permitted to invest an amount not exceeding 15% of its total assets into overseas markets. Based on statistics released by the CIRC, PRC insurance assets as of the end of 2011 totalled about RMB 6 trillion, which means around RMB 900 billion (about US$145 billion) could be invested overseas this year. This development presents significant business opportunities for global fund managers and boutique managers.

This alert was published by international law firm Deacons, Hong Kong. Corporate website: Source

fg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. SEC charges 19 investment firms and one trader for breach of Rule 105[more]

    Benedicte Gravrand, Opalesque Geneva: The Securities and Exchange Commission (SEC) started a push to enhance the enforcement of Rule 105 of Regulation M last year to uncover hedge funds and private equity firms that have illegally participated in an offering of a stock after short selling it duri

  2. Fund managers, bullish on Europe, anticipate monetary policy separation of Fed and ECB[more]

    Komfie Manalo, Opalesque Asia: At least 202 fund managers with $556bn of assets under management said that while the European Central Bank (ECB) has eased its monetary policy that sent sentiments towards Europe to pick up, the Fed is expected to hike its rate in the spring of 2015. Investor

  3. Institutions - North Carolina workers call on state pension to dump up to $6bn in hedge funds, UK pension fund criticizes hedge fund fees[more]

    North Carolina workers call on state pension to dump up to $6bn in hedge funds From Forbes.com: The State Employees Association of North Carolina this afternoon called on state Treasurer Janet Cowell to withdraw all investments in hedge funds, which appear to amount to approximately $6 b

  4. News Briefs - Limited partners of investment managers may be subject to self-employment taxes, Just one week left until NYC's Rocktoberfest[more]

    Limited partners of investment managers may be subject to self-employment taxes On September 5, 2014, the Internal Revenue Service (“IRS”) issued Chief Counsel Advice 201436049, concluding that members of an investment manager were subject to self-employment taxes with respect to their e

  5. Institutions - Adviser's faith in hedge funds unshaken by CalPERS' move Advisers weigh in on CalPERS’ decision, Gina Raimondo sees no reason to follow California’s lead, exit hedge funds, Danish pension funds step up 'alternative investments'[more]

    Adviser's faith in hedge funds unshaken by CalPERS' move From WSJ.com: Financial advisers who use hedge funds in their clients' portfolios say they aren't rethinking that approach after a huge California pension fund announced plans to exit the hedge-fund market. The decision by the Cali