The Hong Kong arm of China Asset Management has launched its first dedicated offshore yuan bond fund, tapping into a growing appetite for yuan-denominated assets as Beijing accelerates its currency internationalisation push.
The new vehicle from China’s second-largest fund house this week targets dim sum bonds – yuan-denominated notes issued in Hong Kong, which has expanded rapidly due to low Chinese interest rates and supportive policy measures.
Appetite for yuan investments has also grown as domestic investors seek higher-yielding assets offshore, while global investors look to diversify from the U.S. dollar amid geopolitical shifts.
“The confluence of accelerating RMB internationalization, supportive policy measures, and attractive relative yields have driven demand for offshore RMB assets, particularly dim sum bonds issued in Hong Kong,” said Tian Gan, CEO of ChinaAMC (HK).
The new launch coincides with fresh efforts from China’s central bank to boost the yuan bond market in Hong Kong and advance its currency internationalisation plan.
The People’s Bank of China on Thursday announced a set of measures including support for foreign institutions conducting repo business and plans to roll out yuan-denominated government bond futures.
That followed the expansion of the southbound leg of the Bond Connect earlier this year, supporting mainland investors to invest in offshore bonds which had boosted inflows and deepened the liquidity pool.
The fund focuses exclusively on investment-grade and allocates at least 70% to dim sum bonds. An ICE BofA index tracking CNH-denominated debt has an effective yield of 2.7%.
(Reporting by Jiaxing Li in Hong Kong; Editing by Stephen Coates and Toby Chopra)
