China Investment Management: Market Update (September 2011)

<?xml:namespace prefix = o />The difficult-to-pronounce acronym on the tip of everyone’s tongue of late has been RQFII: the possibility that in the very near future managers will be able to raise RMB offshore and bring it back into the Mainland’s markets. This is of special interest given how fast RMB has been accumulating in Hong Kong in recent months, and providing an outlet where it can access higher returns will continue to prime the pump. How, exactly, international managers stand to gain from this development is still up for discussion – for the near future Z-Ben Advisors sees domestic subsidiaries as having the best access to new business opportunities. Institutional opportunities remain another area of keen interest but realizing payday on these relationships has been somewhat more difficult – an area we continue to explore in our institutional strategy series.

Volatile markets continued into August, with fund managers still reeling from hits taken in earlier months. Redemptions were limited but investors simply appear to be waiting for a momentary return to par before cashing out. These concerns aside, interest in China’s financial services remains acute both domestically and from overseas. Power Corp. of Canada recently purchased China AMC, bringing an effective end to an era of M&A motivated buy ins. Other opportunities remain, with only a handful of firms exploring the possibility of using a wholly-owned platform to both manage and raise money. Other major changes are on the horizon, with banks soon being no longer able to utilize their wealth management products as a platform to fuel credit growth. This means that a large amount of assets previously locked up in these short-term instruments will soon come flowing out, potentially towards an intrepid asset manager that is able to provide a credible alternative. These and other important topics are explored in this report:

• RMB Internationalization: The Convergence Hypothesis
   

• Market Entry: Bridge on the River Buy
   

• Alternative Platforms: The Possibility of 100% Control 
   

• China’s Trust Industry: Time for Foresight and New Investment
   

• GM Turnover: Sleeping with the Fishes
   

• Wealth Management: Redistributing RMB5.0tr
   

• Institutional Strategy: A Little More Conversation, a Little Less Action
   

For more information, please contact us at info@z-ben.com. Please see the Sample below.