ChinaAMC (HK) launches ChinaAMC Select RMB Investment Grade Income Fund in HK

Capturing Opportunities of RMB Internationalization.

China Asset Management (Hong Kong) Limited ("ChinaAMC (HK)") is pleased to announce the launch of Hong Kong authorized mutual fund - ChinaAMC Select RMB Investment Grade Income Fund (“the Fund”).

The Fund is the first Hong Kong-domiciled, RMB-denominated fixed income product that offers cross-market, pure investment-grade exposures. Riding on the opportunities arising from RMB internationalization, the Fund aims to achieve relatively stable return in volatile market conditions through implementing a highly diversified and investment strategy.

Flexibility • Diversified-allocation • Robust • Stable dividend

The Fund invests 100% in investment grade bonds and maintains an exposure of no less than 70% in RMB. The Fund primarily invests in Dim Sum bonds, onshore Chinese bonds, global USD bonds (hedged back to RMB), and cash and cash equivalents. The portfolio maintains low credit risk through holding pure investment grade bonds. At the same time, the portfolio adopts a diversified allocation strategy, flexibly allocating bond assets to different markets, countries and industries according to the changes in economic cycle, policy orientation and rate trend, and making timely and dynamic adjustments. The Fund also manages interest rate risk exposure flexibly and diversifies the asset allocation through multi hedging instruments to seize onshore and offshore bonds opportunities. In addition, the Fund also offers dividend distributing share classes, providing investors with stable cash flow. The target annualized dividend yield of RMB share is 4%*.

Bank of China (Hong Kong) Limited ("BOCHK") and Nanyang Commercial Bank are sole distributors during the Fund’s initial offering period.

RMB assets are attractive in long-term amid global interest rate hike

The announcement of interest hikes by many major central banks may have triggered corrections across many asset classes; however, RMB bond assets have outperformed year to date. Looking ahead, we remain positive about the performance of RMB-related assets in the long run.

Although Chinese economy faces short-term challenges due to China’s lockdown in the COVID outbreak, domestic inflation remains relatively mild compared to most Europe, US and other emerging markets. With the gradual easing of lockdown policies and the introduction of more supportive economic policies, China's economy is poised to remain resilient.

We believe that foreign allocation to RMB assets will steadily increase, particularly RMB bonds. Currently, foreign holdings account for only 3% of what remains the second largest bond market in the world, a far lower ratio than seen in other countries. The capital inflow that would result by including RMB assets in international bond indices would amount to US$ 100 billion in passive capital alone. Meanwhile, the low correlation between the performance of RMB bonds and that of major global bond indices is also an appealing factor to foreign institutions looking to achieve greater portfolio diversification.

Tian GAN, CEO of ChinaAMC (HK), explains “With the strong growth of China economy in the past years, RMB plays an increasingly important role in global trade settlements. The tension between Russia and Ukraine also represents an important opportunity for RMB internationalization. We also see the Central Government's determination and commitment to promote the internationalization of RMB. The Central Government released a batch of supportive policies, including the launch of Cross-boundary Wealth Management Connect, the Southbound Bond Connect, the ETF Connect, and the uplift of QFII investment quota restrictions. And the central bank issued a document to establish a normal mechanism for the issuance of central bank bills in Hong Kong to promote the development of RMB Internationalization and to strengthen the status of Hong Kong as the key offshore RMB centre. The scale of offshore RMB deposits has risen rapidly in recent years. Currently, the scale of offshore RMB deposits exceeds RMB 1 trillion, and the scale in Hong Kong has significantly increased to RMB 900 billion. The launch of this new RMB Investment Grade Income Fund is well-timed and we believe RMB-related assets will offer promising prospects for investors in the long run. Under this narrative, we hope to provide a competitive and effective solution for investors to seize opportunities from RMB internationalization and to achieve the objective of capital appreciation and relatively stable income generation through leveraging the outstanding investment capability of our fixed income team.”

Joyce LEUNG, Assistant General Manager of Personal Digital Banking Product Department, Bank of China (Hong Kong) Limited (“BOCHK”), said “BOCHK is honoured to be a distributor of the ChinaAMC Select RMB Investment Grade Income Fund in the initial offering period, bringing our customers an innovative fixed income fund. With the accelerated integration of Guangdong-Hong Kong-Macau Greater Bay Area, about 60% of BOCHK’s mid-to-high-end customers held RMB-denominated assets as of the end of 2021, reflecting notable demands for RMB asset allocation. BOCHK and ChinaAMC (HK) will continue to collaborate closely to provide diversified investment products and services, to help customers capture opportunities arising from the internationalization of RMB and achieve their investment goals through flexible asset allocation."

Michael TING, Head of Investment Product Specialists Division, Nanyang Commercial Bank, Limited, said “As the Central Government continues to promote the internationalization of RMB, the use of RMB and its importance in monetary functions steadily increase globally. RMB ranks 5th in the world in terms of global foreign reserves, with total foreign exchange reserves of RMB reaching US$336.1 billion in Q4 2021. RMB also ranks 4th most-used currency for global payments in SWIFT. Foreign institutional investors’ demand for RMB asset allocation is increasing, and they have explicit preference for RMB products that could provide stable returns. As the world's largest offshore RMB business hub and the key financial centre that connects Mainland China with the rest of the world, Hong Kong has unparalleled prospects for the business of RMB-related products. Being the first pure investment-grade, RMB-denominated, cross-market RMB fixed income product in Hong Kong, ChinaAMC Select RMB Investment Grade Income Fund will help international investors capitalise on the fast-growing RMB market and diversify their portfolio.”