INDUSTRIAL and Commercial Bank of China (Stock Code:601398) yesterday started pooling clients' yuan assets to directly invest in H-shares - the first bank to test the new scheme approved in May.
The Beijing-based bank yesterday started accepting clients' orders to invest in Hong Kong-listed stock under its qualified domestic institutional investors scheme.
Clients have to invest at least 300,000 yuan (US$39,215) in the product.
Up to 50 percent of the money will be invested in Hong Kong-listed domestic companies while the rest will be invested in fixed-income assets like bonds, ICBC said yesterday.
The product can help investors benefit from the rising H-shares, whose prices are lower than the soaring yuan-backed A-share market, and trim risks on over-heavy investment in A-shares, the bank said.
"The expanded investment channel boosts the appeal of the QDII program, but a rush is unlikely as the yuan is still rising, besides the draw of the mainland stock market," said Wu Kan, a Shanghai Securities Consulting Co analyst.
The barometer Shanghai Composite Index has gained 59 percent this year after soaring 130 percent last year. The yuan has gained more than seven percent since China dropped its decade-long link to the US dollar in July 2005.
The 300,000-yuan threshold is much higher than that of previous QDII products, which normally require an investment of 50,000 yuan to 80,000 yuan.
The China Banking Regulatory Commission said on May 11 that commercial banks can invest as much as 50 percent of funds in QDII programs in overseas stock markets, with a single holding capped at five percent of a product's asset value.
China introduced the QDII program in July last year to channel part of its mounting foreign exchange reserve and ease the flush of cash in market.
China's growing forex reserves arise from China's trade surplus and at the end of March topped US$1.2 trillion, the world's largest.
However, market enthusiasm for QDII schemes is not strong as investors fear a rising yuan will eat into their profits.