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BlackRock gains foothold in China with RQFII licence award

BlackRock gains foothold in China with RQFII licence award

BlackRock has received its first Renminbi Qualified Foreign Institutional Investor (RQFII) licence from the China Securities Regulatory Commission.

The licence has been awarded to BlackRock Asset Management North Asia, a subsidiary of BlackRock, and allows the asset manager to invest in the domestic capital markets in China.

This includes including the China A-Shares equity and onshore bond markets. BlackRock will also apply for investment quotas under the licence from the State Administration of Foreign Exchange.

Under the terms of the RQFII approval, the London-based company is now able to invest offshore RMB capital into China’s mainland equity and fixed income markets.

BlackRock's success follows that of EM specialist Ashmore, which was named the first company not based in Greater China to earn RQFII status in January of this year.

Commenting on BlackRock's award, Marc Desmidt, head of strategic product management for Asia Pacific, said: 'China is an important investment destination for our clients globally as it undergoes a pivotal transformation, and gradually internationalises its capital markets.'

BlackRock received its first QFII license with an investment quota of US$100m in June 2012. It was then awarded a second QFII license in October 2012, receiving an additional investment quota of US$100m in March 2013.

Internationalising efforts

China is bringing in measures to internationalise the RMB through the Renminbi Qualified Foreign Institutional Investor programme, which it has expanded pilot programmes to markets such as London, Singapore, and Taiwan.

The relaxation of RMB rules unveiled on March 7 has been welcomed with wide approval from Hong Kong, as a way to launch more innovative and diversified renminbi investment products on the island.

As a further step to boost the RMB, the financial regulators of Hong Kong and China last week also entered into an agreement to start a mutual stock market access programme within six months which will allow investors in both countries to participate in each other’s stock markets.

Management reshuffle

BlackRock's move into the Chinese mainland market follows a recent reshuffle of senior posts within its Asia operations.

This will see Ryan Stork take over as manager of Blackrock’s Asia Pacific operations from 1 June, replacing Mark McCombe. Meanwhile, former Goldman Sachs chief China equity strategist, Helen Zu, joined BlackRock as head of China equities one month ago

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