Matthews Asia Awarded QFII License to Invest in China's A-Share Market
SAN FRANCISCO, JULY 9, 2014—Matthews Asia (Matthews International Capital Management) today confirmed it has been awarded a Qualified Foreign Institutional Investor (QFII) license by the China Securities Regulatory Commission (CSRC) and a US$100 million quota from the Chinese State Administration of Foreign Exchange (SAFE).
The award of a QFII license and quota enables the firm to invest, on behalf of its clients, up to US$100 million directly into China’s domestic securities market, including the market for China A-shares. Currently, direct investments into this market by foreign investors can only be made with a QFII license and quota. The quota will be made available to funds managed by the company, including its U.S.-domiciled open-ended equity mutual fund family, Matthews Asia Funds.
China’s A-share market is the fifth largest public equity market in the world. It consists of over 2,300 companies totalling approximately US$2.6 trillion in market capitalization1 and offers investors the opportunity to invest directly into a growing market of companies that are benefiting from China’s economic transformation. The breadth and depth of the market also presents a much bigger pool of investment opportunities compared to Chinese companies listed on the H-share market in Hong Kong or the B-Share markets in Shanghai and Shenzhen.
The A-share market is considerable, but Matthews Asia believes that significant improvements in corporate governance standards are still required. The firm believes this supports the need to conduct extensive due diligence on prospective investments and highlights the value of taking a long-term active management approach.
Matthews Asia is a specialist investment manager located in San Francisco. With US$26.6 billion in assets under management as of June 30, 2014, the firm focuses on long-term investing solely in Asia. It is the investment advisor for the Matthews Asia Funds, a range of 15 open-ended equity and fixed income mutual funds incorporated in the U.S. While the QFII award provides Matthews Asia with greater flexibility to invest in China’s domestic equity markets, it will not change the overall investment objectives of the Matthews Asia Funds.
William Hackett, Chief Executive Officer, commented: “As a specialist investment manager focused on Asia, the award of a QFII license by the CSRC and quota by SAFE in China reflects our deep, long-term commitment to investing in the region. We believe having access to the full range of opportunities across equity markets in Asia is extremely important and the award now enables us to bring the potential benefits of exposure to China’s domestic equity market to investors in the U.S. We are pleased to be able to offer our shareholders access to this important market through our U.S.-domiciled mutual fund family.”
Robert Horrocks, PhD, Chief Investment Officer, commented: “As the fifth largest equity market in the world by market capitalization, the A-share equity market in China represents a considerable investment universe. As its financial markets continue to evolve and we see further improvements in corporate governance, we expect to find a growing number of compelling investment opportunities. China’s onshore equity market offers our investment team access to a more diversified range of sectors and companies compared to those available through other markets, such as the H-share market in Hong Kong. With our experienced investment team already spending significant time on-the-ground researching investment ideas in China, we believe there are a large number of quality companies with growing revenues, established management teams and good corporate governance. With this license and quota, we are confident that we will be able to take advantage of the significant long-term investment potential that exists in the country for the benefit of our shareholders.”
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About Matthews Asia
At Matthews, we believe in the long-term growth of Asia. Since 1991, we have focused our efforts and expertise within the region, investing through a variety of market environments. As an independent, privately owned firm, Matthews is the largest dedicated Asia-only investment specialist in the United States. With US$26.6 billion in assets under management as of June 30, 2014, Matthews employs a bottom-up, fundamental investment philosophy, with a focus on long-term investment performance.
This announcement is for informational purposes only and does not, in any way, constitute investment advice or an offer to sell or a solicitation of an offer to buy any security or product mentioned herein. An investment in the Matthews Asia Funds is not available to investors in any jurisdiction in which such an offer or solicitation is not lawful. No representation is given that shares, products or services mentioned herein are suitable for any particular investor.
1 Data Source: Factset, Bloomberg