Foreign Firms Ramp Up QDLP Investment Product Sales to Wealthy Chinese
Zhou Ailin
DATE:  Jul 10 2024
/ SOURCE:  Yicai
Foreign Firms Ramp Up QDLP Investment Product Sales to Wealthy Chinese Foreign Firms Ramp Up QDLP Investment Product Sales to Wealthy Chinese

(Yicai) July 10 -- With wealthy people in the Chinese mainland becoming increasingly willing to allocate their assets offshore and amid the constant expansion in mutual fund managers' quotas for the Qualified Domestic Institutional Investor program, foreign institutions have been actively issuing private equity fund products of the Qualified Domestic Limited Partnership channel for offshore investment.
Foreign fund managers with businesses in the Chinese mainland, including Barings, Morgan Stanley Investment Management, Abrdn, and Wellington Management, have issued their respective new QDLP products this month, Yicai learned from relevant funds' sales channels and insiders. Many other foreign institutions are applying for new investment quotas. 
QDLP is an institutional arrangement in which fund managers with pilot qualifications raise funds from people and institutional investors in the Chinese mainland who are qualified investors and set up funds for offshore investment. These products target investors with high net worth.
"Chinese clients are highly enthusiastic about allocating assets offshore and especially value the relatively higher yields of offshore fixed-income assets and opportunities brought by such stock markets," the head of a leading securities firm's business department told Yicai. “Morgan Stanley's new products are sold out in just a few seconds. Last month, the product issued by a foreign asset manager, which allows buyers to invest in US bonds, was sold out in 20 minutes.”

The planned investment targets of recently and newly issued QDLP products are mainly offshore credit bonds and the US stock market, Yicai found. The popularity of these products shows that wealthy Chinese people are becoming increasingly willing to allocate their assets offshore.

According to a survey by HSBC Group last month, more than half of the Chinese mainland's wealthy people planned to increase their investment in offshore markets, with Hong Kong amongst those receiving the most attention. Over 30 percent of the polled plan to invest 61 percent of their cash in the upcoming year. 

The investment threshold of the QDLP channel was usually CNY1 million (USD137,450). However, some new products have lowered it to about CNY300,000 to CNY400,000 (USD41,235 to USD54,980). 

Shanghai was the first to launch a QDLP pilot in 2013, with six big overseas hedge fund managers cumulatively receiving USD300 million in QDLP investment quota and becoming the first batch of approved foreign institutions. The pilot area has expanded to Chinese regions, including Beijing, Chongqing, and Qingdao cities and Guangdong, Hainan, and Jiangsu provinces.

The investment quota obtained by foreign institutions has also gradually increased, with that acquired by one of them exceeding USD600 million.

Editors: Tang Shihua, Martin Kadiev


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Keywords:   New Product Issuing,Private Fund,Overseas Investment Fund,Foreign Wealth Management Institution,Wealthy People,Market Analysis,Qualified Domestic Limited Partner