Shanghai to give money managers access to assets in private markets to rival Hong Kong for global capital

·2-min read

Shanghai will give “qualified investors” access to a wider array of assets in private markets from next month under the city’s pilot investment schemes, just as appetite is surging among global money managers.

Under the Qualified Foreign Limited Partner (QFLP) scheme, foreign investors will be allowed to buy shares in unlisted companies, as well as participate in private placements by listed companies, private equity and venture capital products, according to a statement on Tuesday.

Under the Qualified Domestic Limited Partner (QDLP) scheme, mainland investors will be able to access assets ranging from stocks and bonds issued by private companies, as well as invest in securities, commodity and financial derivatives, it said.

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The measures will give the nine-year-old investment schemes a makeover and empower China’s biggest commercial city in its effort to become a global asset management hub. It came just as foreign investors bought a record 21.7 billion yuan (US$3.4 billion) of local stocks on Tuesday via the southbound Connect scheme with Hong Kong.

It will also lift investment restrictions and promote the internationalisation of the yuan as the Shanghai Stock Exchange seeks to rival Hong Kong for global capital. Hong Kong is the favourite venue for global stock offerings in seven of the past 12 years, where sustained market reforms have lured a spate of jumbo listings.

Shanghai aims to be the asset management hub in Asia and among top cities globally by 2025, according to Tuesday’s document. The world’s top money managers including BlackRock, Bridgewater, Vanguard and Fidelity have already set up offices and started businesses in Shanghai.

The city will also explore the launch of more exchange-traded funds linked to the technology industry to promote the integration of finance and innovation, it added. It is also seeking to roll out more real estate investment trust products to support the nation’s infrastructure investment.

Other potential developments include a deepening of the Stock Connect schemes with Hong Kong and London, as well as the impending launch of a wealth management link, it added, without elaborating.

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