Boost to Chinese investment in Australia
Updated
China's financial regulator has added Australia to a list of approved destinations for investment by authorised Chinese funds. The ruling means Chinese banks can invest in Australian shares and managed funds, from a fund pool of about $US50 billion. Analysts say the move will help drain excess liquidity from the Chinese economy, coinciding with other moves by Beijing to curb inflation.
Presenter: Claudette Werden
Speakers: Min Yang, chair of the Australian Stock Exchange-listed AusSinoFocus; Richard Gilbert, Chief Executive of Australian Investment and Financial Services Association; Jeremy Duffield, Australian head of US firm Vanguard Mutual Funds Management
WERDEN: The new agreement means Australia will join a select few nations, such as the United States, Britain, Hong Kong, Singapore and Japan, as members of China's qualified domestic institutional investor scheme. The QDII has earmarked around $US50 billion for overseas investment. It's a small amount of the fund megapool that's developing in China, but it'll have enormous benefits for Australia, according to Richard Gilbert, Chief Executive of Australia's Investment and Financial Services Association.
GILBERT: One or two percent on GDP can mean a lot. Presently Australia exports 30 per cent of its funds under management and it only receives a miserable 1.5 per cent from overseas. if we would double or treble that it would be quite a significant outcome. It's billions of dollars of foreign capital coming into Australia, and we are a capital hungry country.
WERDEN: For the past 12 years, Chinese securities firms have been allowed to invest in Australia, but this new QDII approval status means China's big banks and financial institutions can now do the same and it's likely they'll be asking Australian fund managers for help in diversifying their portfolios. Jeremy Duffield, the head of the Australian arm of the US mutual fund management giant Vanguard says China's investor market has a potential audience of 1.4 million people.
DUFFIELD: The mutual funds market has gone from zero some ten years ago to three to 400 hundred billion dollars today so it's really been a rapidly growing market. The primary interest remains on the domestic front but over time they're going to have to invest overseas and at that point we'll have good opportunities.
WERDEN: Min Yang is the chair of ASF group - Aus Sino Focus. With offices in Sydney and at least three Chinese cities, as well as Macau and Hong Kong, she says her company is well positioned to take advantage of the QDII decision.
YANG: In Chinese people's minds, Australia as an investment environment is more stable and secure so if they're looking for more stable investment they're looking to Australia. At the same time we have a lot of listing companies, resource sector which Chinese investors are interested in.
WERDEN: Analysts expect Chinese interest to be in property trusts which have recently received new tax advantages. They say it'll also provide an avenue to access world capital markets through Australia.
DUFFIED : It gives Chinese access to products and services that they don't currently have access to. So far most Chinese investors have invested in domestic Chinese securities which have been high returning but very volatile. What this allows is for Australian firms to help Chinese begin the road to international diversification which might include investing in Australian property trusts, Australian shares , Australian fixed income instruments and also through Australian based funds managers international investments all over the world.
YANG : Everyone knows China is growing very fast but they really need a lot of resources to back up their development, so that's why we think the resource sector has great potential and property because, a lot of our Chinese investors they really like Australia's living environment. Before I think it was just tinier investors from China coming to Australia but now with this QDII approval there will be more and more Chinese investors coming to Australia.
WERDEN: The new agreement means Australia will join a select few nations, such as the United States, Britain, Hong Kong, Singapore and Japan, as members of China's qualified domestic institutional investor scheme. The QDII has earmarked around $US50 billion for overseas investment. It's a small amount of the fund megapool that's developing in China, but it'll have enormous benefits for Australia, according to Richard Gilbert, Chief Executive of Australia's Investment and Financial Services Association.
GILBERT: One or two percent on GDP can mean a lot. Presently Australia exports 30 per cent of its funds under management and it only receives a miserable 1.5 per cent from overseas. if we would double or treble that it would be quite a significant outcome. It's billions of dollars of foreign capital coming into Australia, and we are a capital hungry country.
WERDEN: For the past 12 years, Chinese securities firms have been allowed to invest in Australia, but this new QDII approval status means China's big banks and financial institutions can now do the same and it's likely they'll be asking Australian fund managers for help in diversifying their portfolios. Jeremy Duffield, the head of the Australian arm of the US mutual fund management giant Vanguard says China's investor market has a potential audience of 1.4 million people.
DUFFIELD: The mutual funds market has gone from zero some ten years ago to three to 400 hundred billion dollars today so it's really been a rapidly growing market. The primary interest remains on the domestic front but over time they're going to have to invest overseas and at that point we'll have good opportunities.
WERDEN: Min Yang is the chair of ASF group - Aus Sino Focus. With offices in Sydney and at least three Chinese cities, as well as Macau and Hong Kong, she says her company is well positioned to take advantage of the QDII decision.
YANG: In Chinese people's minds, Australia as an investment environment is more stable and secure so if they're looking for more stable investment they're looking to Australia. At the same time we have a lot of listing companies, resource sector which Chinese investors are interested in.
WERDEN: Analysts expect Chinese interest to be in property trusts which have recently received new tax advantages. They say it'll also provide an avenue to access world capital markets through Australia.
DUFFIED : It gives Chinese access to products and services that they don't currently have access to. So far most Chinese investors have invested in domestic Chinese securities which have been high returning but very volatile. What this allows is for Australian firms to help Chinese begin the road to international diversification which might include investing in Australian property trusts, Australian shares , Australian fixed income instruments and also through Australian based funds managers international investments all over the world.
YANG : Everyone knows China is growing very fast but they really need a lot of resources to back up their development, so that's why we think the resource sector has great potential and property because, a lot of our Chinese investors they really like Australia's living environment. Before I think it was just tinier investors from China coming to Australia but now with this QDII approval there will be more and more Chinese investors coming to Australia.
