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Presentation for Presentation for National Press FoundationNational Press Foundation
Teh-Hsiu FuTeh-Hsiu FuCEOCEO
Everbright Pramerica Fund Management Everbright Pramerica Fund Management CompanyCompany
Shanghai ChinaShanghai ChinaJune 8, 2007June 8, 2007
2
Established in April 2004;
A joint venture between Everbright Securities Company, Ltd., a
subsidiary of China Everbright Group and the investment
management business of Prudential Financial, Inc. ;
Everbright Pramerica has a registered capital of RMB 160 million with
67% by Everbright Securities and 33% by Pramerica.
Current staff number at 59.
Introduction of Everbright Pramerica
3
As of June 2007, the company manages four investment funds in Ch
ina, i.e., Quantitative Core Equity Fund, Dividend Equity Fund, New
Growth Equity Fund and Money Market Fund;
The fund assets were invested in the Chinese equity and bond mark
ets;
Denominated in RMB, the funds were distributed primarily by banks
and brokerage firms to Chinese investors;
The total AuM of the four funds were RMB 6.63 billion as of May 31,
2007.
EPF Fund Family
4
Market Background
EconomyEconomy
The Chinese economy grew at a rate of around 10% in the last few years,
mostly driven by infrastructure investment and domestic consumption
needs;
Real EstateReal Estate
The government launched several austerity measures in 2005-2006 to
curb the overheating real estate market especially in Beijing and Shanghai;
CurrencyCurrency
The government adopted a more flexible foreign exchange mechanism in
July 2005 which prompted the RMB to appreciate from the previous level
of 8.27 to the current level of 7.65 to 1 US$.
5
Recent Market Development
The most significant transformation of the Chinese stock market
was the reform program of state-owned shares which began in
mid 2005;
Record number of retail investors flocked to open security
trading accounts, providing fresh capital which lifted the Chinese
equity market to record high;
Fear of market bubble led many institutional investors to reduce
equity exposure in recent weeks.
6
QFII Update
The Chinese government introduced the QFII (Qualified Foreign
Institutional Investors) program in 2003 in order to allow foreign
capital to invest in the Chinese market in an orderly and controlled
manner;
So far, there were 52 approved foreign institutions to use the QFII
quota to invest in China with an approved amount of USD 10
billion;
The government recently indicated that the total QFII quota will be
increased to USD 30 billion.
7
QDII Update
QDII (Qualified Domestic Institutional Investors) program was
launched by selected banks, insurance companies and fund
management companies with government approval;
The program allows Chinese investors to invest in offshore
markets, with Hong Kong as the current focus;
Investor interest to invest in US or other international markets is
modest at this stage due to the hot local equity market and the
concern about the appreciating RMB;
Overtime, we expect that Chinese investors will be more
interested in QDII products as experience in Hong Kong and
Taiwan will demonstrate.
8
The Investment Grid
Local funds
Local bank products
Local insurance products
Local brokerage products
QDII approval needed
(RMB to foreign currencies)
QFII approval needed
(Foreign currencies to RMB)
Open
Chinese
Investors
International
Investors
Chinese
Market
International
Market
9
Fund Market Overview
China’s fund Industry has been developed since 1997, and the first open-e
nd fund was launched in 2001;
Number of fund companies in existence: 58;
There are 34 local companies and 24 joint venture companies, of which 4 a
re linked with domestic big banks;
Foreign partners of the fund companies include: Prudential (US), ING, J.P.
Morgan, Fortis, Invesco, Allianz, Paribas, Prudential (UK), UBS, Principal,
Franklin Templeton, BMO, CSFB, SG, Deutsche, ABN AMRO, AIG, Merrill
Lynch, Schroders, HSBC, etc.
10
As of March 31, 2007, there were 332 funds in the Chinese fu
nd industry, with total assets under management of RMB 1,17
5 billion;
Total AuM of 41 close-end funds were RMB 185 billion, accou
nting for 16% of total AuM;
Total AuM of 291 open-end funds were RMB 990 billion, acco
unting for 84% of total AuM.
Fund Market Overview
11
Fund Market Overview
No. of FundsTotal assets under
management (RMB billion)
Dec 2005 Dec 2006 Mar 2007 Dec 2005 Dec 2006 Mar 2007
Close-endFunds
54 53 41 82 1622 185
Open-endFunds
169 268 291 394 694 990
Total 223 321 332 476 856 1175
12
Fund AuM 2002-March 2007
150239
469
856
1175
325
0
200
400
600
800
1000
1200
2002 2003 2004 2005 2006 Mar.2007
RMB Billion
476
13
Open-end Fund Asset Breakdown
As of
March 2007Equity Funds
Guarantee Funds
Hybrid Funds
Bonds Funds
Money Market Funds
Total
Size
(RMB billion)582 13 269 37 89 990
Fund Assets (RMB billion)
59%
1%
27%
4%
9%
Equity Funds
Guarantee Funds
Hybrid Funds
Bonds Funds
Money Market Funds
14
Discussion Points –What global areas might China’s new investment fund be looking at?
RegionsRegions SectorsSectors
US
Europe
Japan
Emerging Markets
Equities
Bonds
Money Market
Real Estate
Commodities
Hedge Funds
15
Everbright Pramerica Fund Management Co.
Address: 46/F Bund Center, No. 222 Yan An Road (E), Shanghai, ChinaPostcode: 200002Tel: (86) 21 3307 4700 Fax: (86) 21 6335 1152Website : www.epf.com.cn
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