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Zoe SL Chan

Beijing’s heightened scrutiny of overseas portfolio investment and tax practices has yet to significantly weaken mainland investors’ demand for legitimate cross-border investments, according to China International Capital Corporation (CICC).
The Beijing-headquartered investment bank is still seeing “robust” demand from its domestic clients, though the long-term effects of the policy tightening will need to be closely monitored, said Qiao Bo, head of investment products and solutions and a managing director at CICC, at an event in Hong Kong on Thursday.
“Global diversification becomes essential to lower overall portfolio volatility by including overseas assets,” Qiao added.
Beijing has launched a string of measures to tighten control over cross-border investment activities in recent weeks, including a clampdown on firms helping mainland clients to evade capital controls and invest in overseas stocks.
The latest move came on Friday, when the Chinese government announced it would impose personal-income taxes on offshore trusts, closing a loophole frequently used by wealthy families to avoid tax.
While the campaign has sparked some concern in Hong Kong, CICC expressed optimism about the city’s fund development prospects and its open-ended fund company structure.
“We have strong confidence in CICC’s asset management scale and business, expecting double-digit annual growth. This is based on our long-term positive view of Chinese managers going global and cross-border capital flows between the two markets,” said Qingchuan Liu, the firm’s head of asset custody services and also a managing director.
As Chinese entrepreneurs expand overseas, they generate substantial demand for US dollar asset financial management and allocation
Qiao Bo, China International Capital Corporation
More Chinese asset managers are choosing Hong Kong as the primary base for their going-global strategies, according to CICC, which was the biggest sponsor of initial public offerings in Hong Kong during the first half of the year.
This year, the trend has shifted from “strategic overseas trials” – mostly consisting of single product launches – to a new phase of “globalised operations”, with managers building large teams, setting up entities, obtaining multiple licences, and launching multicurrency products, Liu said.
Hong Kong now has more than 130 mainland private equity firms holding a “type 9” licence, which authorises them to act as asset managers in the city, according to CICC data. More than 40 of those players are domestic private funds with more than 10 billion yuan (US$1.48 billion) in assets.
“As Chinese entrepreneurs expand industries overseas, they generate substantial demand for US dollar asset financial management and allocation, naturally creating demand for long-term private fund partners to offer corresponding offshore products,” Qiao said.
Hong Kong’s asset management industry had a record HK$42.2 trillion (US$5.4 trillion) of assets last year, up around 20 per cent from a year earlier, according to data from the Securities and Futures Commission.
Mainland Chinese private managers looking to go global tend to first extend their operations to Hong Kong, with most investors initially choosing Greater China assets as they align with domestic investment frameworks, according to CICC.


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Beijing’s tightening scrutiny of overseas trading has not significantly harmed ‘legitimate’ cross-border investment flows, lender says.


Cross-border investment still ‘robust’ despite China’s growing controls: CICC

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Beijing’s tightening scrutiny of overseas trading has not significantly harmed ‘legitimate’ cross-border investment flows, lender says

Beijing’s tightening scrutiny of overseas trading has not significantly harmed ‘legitimate’ cross-border investment flows, lender says