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ICBC (Europe) UCITS SICAV –
China Opportunity RQFII Bond Fund
March, 2015
FOR MARKETING PURPOSES ONLY
* Please read the disclaimer at the end of this marketing material.
Financial Service Provider in Belgium: ICBC (Europe) S.A. Brussels Branch
Net Asset Value Publication: www.fundspare.com and www.beama.be
2
Contents
Why Invest In RMB Assets?
Why Invest In ICBC China Opportunity RQFII Bond Fund?
Why Invest In China’s Onshore Bond Market?
Why Invest In RQFII Bond Fund Through ICBC?
3
The Rise of China’s Economy and Its Currency
Source: IMF
Proportion of world GDP for the countries
with the top 10 highest nominal GDP
Source: Bloomberg
Source: Bloomberg
4
The Formation of China’s Onshore and Offshore Market
Historically, the value of the RMB was pegged to the U.S. dollar
Time
2005
2007
Origins
Introduction of a floating RMB
The RMB slowly started to float in a narrow margin at a fixed base rate reference to
a basket of world currencies.
The flexibility of the exchange rate gradually increased. China has initiated various
pilot projects to "internationalize" the RMB.
Hong Kong has been developing an offshore deposit market for RMB.
Launch of the “Dim Sum Bonds” in Hong Kong
A major step has been achieved when the Chinese government allowed companies to issue RMB denominated debt in Hong Kong, so-called Dim Sum Bonds.
Hong Kong’s offshore market allowed both non-Chinese individuals and corporates to own RMB, but still with strict limits on the volume.
Today Offshore and Onshore markets
Due to capital controls, there are two parallel markets for the RMB: the onshore RMB (CNY) market and the offshore RMB (CNH) market.
5
The Way for RMB Internationalisation
Trading Currency1 Investment Currency2 Reserve Currency3
6
Development of RMB as International Settlement Currency
Sources: CEIC, IMFSources: SWIFT
Cross-Border Trade Settlement
(In RMB bn)
RMB & World Payments Currency in Value
The market saw stronger SWIFT payments and higher RMB trade settlement percentages
compared with 2013. RMB reinforced its position as the 7th most active currency for global
payments and accounts for 1.55% of payments world.
More corporate treasurers hold RMB in their book.
7
Rapid Growth of Offshore RMB Deposits
Offshore RMB deposits in RMB hubs such as Hong Kong, Singapore, London and
Luxembourg, have seen a rapid growth since 2010. For instance, there are 148 authorized
institutions engaged in RMB business in Hong Kong, RMB deposits amount to RMB 1 trillion in
June 2014, 15 times of the amount in 2010.
925.9
14.1
220
79.4
Offshore RMB deposits
Hongkong London
Singapore Luxembourg
Source: Hong Kong Monetary Authority
RMB bnRMB m
8
Significant Growth in Global Asset Allocation
RMB denominated assets have gained momentum and demonstrated a significant growth in global
asset allocation. Since 2010, offshore RMB bonds grew from USD 12 billion to USD 74
billion, representing an annualized growth rate of 60% in the relative stable offshore global bond
market.
Source: BIS
USD bn
9
Access into/out of China through QFII, RQFII and QDII
Onshore Market Offshore Market
RMB Qualified Foreign
Institutional Investor
“RQFII”
Qualified Foreign
Institutional Investor
“QFII”
Qualified Domestic
Institutional Investor
“QDII”
Mainland
China
10
More Liberal Polices Towards RMB
270
80 50
80
80
80
100
Breakdown of RQFII Quota
HongKong London Singapore
France Korea German
Taiwan
0
50
100
150
200
250
300
0
10
20
30
40
50
60
70
80
90
100
QFII, RQFII and QDII Approved Quota, 2003-2014
RQFII(RMB) QDII(USD) QFII(USD)
59.7 bn
82.5 bn
278.6 bn
China has adopted a more liberal open policy to enhance RMB globalization. Through the issuance
of QDII/QFII/RQFII schemes and various territorial based liberation (including the Free Trade Zone
establishment) together with the recent enhancement from State Administration of Foreign Exchange
(SAFE), the market has a concensus that the supply and repatriation of offshore RMB will create
sustainable opportunities for global asset allocation.
Source: CSRC, SAFE
RMB bn
11
Increasing Central Bank Interest in Bilateral Currency Swap
People’s Bank of China (PBoC) has already established bilateral currency swap agreements for
approximately RMB 2.7 Trillion with 25 central banks and monetary authorities.
UK
To be the first western
country to issue government
bonds denominated in RMB
●
Central banks/Monetary authorities have already drawn RMB
funds from currency swap line
Source: PBoC
12
Great Potential On the Way for RMB Internationalisation
Source: Bloomberg, ORI Index
13
Contents
Why Invest In RMB Assets?
Why Invest In ICBC China Opportunity RQFII Bond Fund?
Why Invest In China’s Onshore Bond Market?
Why Invest In RQFII Bond Fund Through ICBC?
14
Comparison of Offshore VS Onshore Bond Market
Dim Sum Bond Market Onshore Bond Market
Currency CNH (offshore RMB) CNY (onshore RMB)
Market Size CNH 568 Billion CNY 33 Trillion
Issuer CompositionChina/HK 77%,
Europe 5%, others 18%China 100%
Corporate Bond Rating
AgenciesInternational rating agencies
(S&P, Moody’s, Fitch)
Local rating agencies
(Dagong, Chengxin, Lianhe)
Rating Composition Rated bonds and CDs: 38% More than 90% are rated
Basic Yield
Comparison5Y government bond: 2.97%
10Y government bond: 3.93%
5Y government bond: 4.01%
10Y government bond: 4.16%
Liquidity (per ticket) CNH 10-20 million CNY 50-100 million
Accessibility Free Via approved quota (e.g. QFII and RQFII)
Tax No withholding tax (WHT)10% WHT on coupon/dividend income
10% provisional WHT on capital gain
Onshore bond market is significantly larger than the Offshore bond market
Source: CSRC, HSBC, S&P, Moody’s, Fitch
15
China’s Onshore Bond Market – Too Big To Ignore
Source: BIS
China’s domestic bond market has grown to become the world’s third-largest, only after
the US and Japan.
Outstanding bonds stood at USD4.9trn as of end 2013, up 13% from a year earlier.
Annual gross issuance reached USD1.5trn in 2013, rising 12.5% from 2012.
16
China’s Onshore Bond Market – At a Glance
Interbank Bond Market Exchange Market OTC
Description
Banks were allowed to trade in this
market since 1997
As of April 2014, there are 85 foreign
banks, 9 foreign insurance
companies, 24 RQFIIs and 1 QFII
Market size shrank significantly after banks
switched to interbank market in 1997
In 2009, listed commercial banks were
allowed to trade bonds in this market and in
2013, they were allowed to issue bond in
this market as well
• It was set up in 2002 to
expand the investor base of
Treasuries
• It offers limited product and
has very small trading volume
Trading Volume 98% 2% 0%
Amount
Outstanding95% 3% 2%
Investor Institutional Institutional and Individual Individual
Bond Traded
Treasuries; PBoC bills; Municipal
bonds; Gov-backed institution bonds;
Financial bonds; Enterprise bonds;
MTNs; Commercial papers; ABN,
RMBS, CDO, Privately placed notes;
NCDs
Treasuries; Municipal bonds; Enterprise
bonds; Corporate bonds; ABS; Convertible
bonds;
Treasuries; Gov-backed
institution bonds; Enterprise
bonds;
Custodian CCDC1, SCH2 CSDC3 ---
Regulator PBoC4 CSRC5 CBRC6
China’s onshore bonds are traded in three different markets in China
1CCDC: China Central Depository and Clearing Corporation 2SCH: Shanghai Clearing House 3CSDC: China Securities Depository and Clearing Corporation 4PBoC: People’s Bank of China 5CSRC: China Securities Regulatory Commission 6CBRC: China Banking Regulatory Commission
Source: PBoC, CSRC, HSBC
17
Onshore Market Investing Channels for Overseas Investors
Qualified Foreign
Institutional
Investors (“QFII”)
Foreign central banks
and SWFs
RMB clearing banks and
settlement banks
Supra-nationals and
Insurance companies
PBoC Interbank
Investment Program
RMB Qualified
Foreign
Institutional
Investors (“RQFII”)
Interbank market Exchange Market
Mark
et
Ch
an
nels
Reg
ula
tory
Bo
die
s
18
Characteristics of the Onshore Bond Market
16%
3%
1%
34%
1%
19%
23%
3%
Bond Trading Volume by Bond Type
Treasury Bonds Central Bank Bills
Local Government Bonds Policy Bank Bonds
Commercial Bank Bonds Corporate Bonds
MTNs Others
64%
20%
2%10%
3%
1%
Bond Trading Volume by Investor Type
Commercial Banks Securities Companies
Special Members Funds Institutions
Credit Cooperative Banks Others
Source: www.chinabond.com.cn
Bond trading volume amounted to RMB37trn in 2013 in the interbank market. Policy bank
bonds, Treasuries and Corporate bonds are the main bond types in spot trading.
Commercial banks are the major investors in the interbank bond market. Bond trading volume of
commercial banks accounted for 64% of total market size in 2013.
19
Characteristics of the Onshore Bond Market
Source: www.chinabond.com.cn
55%
15%
13%
1%9%
7%
Bonds Outstanding by Rating
AAA AA+ AA AA- Others Unrated
22%
60%
8%
2%3%
4% 1%
Bonds Outstanding by Sector
Financials Governments Industrials Materials
Utilities Energy Others
Over 50% of the domestic credit bonds are rated as AAA by domestic rating agencies. Only 9% of
credit bonds are rated below AA-.
In terms of sectors, the government is the single largest issuer with around 60% of total issuance
size while the financial sector is the second largest.
20
Onshore Bond Market Provides Higher Yields
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
1M 3M 6M 1Y 2Y 3Y 4Y 5Y 7Y 8Y 9Y 10Y 15Y 30Y
%Government Bond Yield Curve
China (Onshore) China (Offshore) US Germany UK Japan
Source: Bloomberg, as of 23 May 2014
The fast developing fixed income market in China, both onshore and offshore, provide attractive
investments as RMB internationalise.
The yields on government bonds are much higher than other major countries at all maturities.
21
Onshore Bond Market Offers Global Diversification
China’ onshore bond market provides attractive returns with global diversification.
Unlike the downward trend in developed country bond yields over the past 30 years, China’s
onshore 10-year government bond yield has fluctuated in a narrow range, given China’s
more stable interest rate cycle.
10-year government bond yield
Source: BloombergSource: Wind, Bloomberg
Annualized Return (USD Hedged) and Correlation of
BofA ML Major Government Bond 1-10Yr indices with
US Treasury 1-10Yr index. Since 2005
Germany
Bunds
22
Credit Risk Is Real But Containable
NO. of
Issuers Defaults Default%
NO. of
Issuers Defaults Default%
AAA 209 0 0.00% 283 0 0.00%
AA+ 229 0 0.00% 339 0 0.00%
AA 411 1 0.24% 751 0 0.00%
AA- 269 1 0.37% 395 0 0.00%
A+ 67 0 0.00% 81 0 0.00%
A 27 0 0.00% 21 0 0.00%
A- 38 0 0.00% 43 2 4.65%
BBB 47 1 2.13% 51 1 1.96%
BBB+ 52 3 5.77% 103 1 0.97%
BBB- 52 0 0.00% 72 1 1.39%
BB+ 15 1 6.67% 26 0 0.00%
BB 3 0 0.00% 3 0 0.00%
B 0 0 0.00% 1 0 0.00%
B- 0 0 0.00% 1 0 0.00%
CC 0 0 0.00% 1 0 0.00%
Total 1419 7 0.49% 2171 5 0.23%
2012 2013
Issuer
Rat ings
Source: China Lianhe Credit Rating
Investment grade (AA+ and above) stays intact.
Defaults happened mainly in the non-investment grade space.
Overall default rate remains low.
23
Share Class Hedging Analysis on Interbank Bond Market
Source: Brown Brothers Harriman calculations, Reuters
The purpose of the share class hedging analysis is to present the simulated performance
of the local index (ChinaBond Inter-bank Bond Index) hedged to EUR.
Local CNH Unhedged EURSimulated Hedged EUR
Share Class
Total Return 18.72% 22.37% 13.54%
Annual Return 5.34% 6.38% 3.87%
Annual Standard Deviation 0.88% 8.67% 1.00%
Annual Tracking Error — 8.61% 0.50%
Annual Transaction Costs — — 0.27%
*31 December 2010 to 30 June 2014
The tracking error of this program would have been 50 bps per annum over the period of
12/31/2010 to 30/06/2014, while transaction costs for the period were 27 bps per year.
The share class hedging program performs a sensitivity analysis with hedge ratio
filters, seeking to simultaneously minimize tracking error and transaction costs.
The analysis indicates a 1.0% hedge ratio filter would have balanced the tradeoff between
tracking error and transaction costs, while limiting the number of annual intra-month trades
to only 4-5 events per year.
24
Share Class Hedging Analysis on Interbank Bond Market
Source: Brown Brothers Harriman calculations, Reuters
25
Contents
Why Invest In RMB Assets?
Why Invest In ICBC China Opportunity RQFII Bond Fund?
Why Invest In China’s Onshore Bond Market?
Why Invest In RQFII Bond Fund Through ICBC?
26
ICBC (Europe) UCITS SICAV – Structure
Auditor Legal Advisor
ICBC (Europe) S.A.
UCITS SICAV *
Management Company
Appoint
Central Administration Distribution
ICBC (Europe) S.A.
Delegate
ICBC
Depository
Appoint
Third-party
Portfolio Management
China Opportunity
RQFII Bond Fund
Sub-Fund
*ICBC (Europe) UCITS SICAV is an investment company organised under the laws of the Grand Duchy of Luxembourg
as a société d’investissement à capital variable and is governed by Part I of the UCI Law and qualifies as a UCITS.
ICBC(Asia) Investment
Management Company Limited
Brown Brothers Harriman
(Luxembourg) S.C.A.
Brown Brothers Harriman
(Luxembourg) S.C.A.Ernst & Young S.A.
RBS (Luxembourg) S.A.
Board of the SICAV comprised
of two Directors from ICBC Group
and one Luxembourg-based
Independent Director.
27
China Opportunity RQFII Bond Fund – Key Features
Onshore BondHigh Yield and
Containable Credit Risk
Local Expertise Leverage Expertise
From ICBC and local
partners
CurrencyRMB Exposure
At Your Discretion
With ICBC (Europe) UCITS SICAV, investors stand to benefit from:
The opportunity to achieve an attractive return;
A high degree of predictability, though not guaranteed;
Being part of the rise of RMB Internationalisation while diversify your currency exposure;
Your money in experienced hands of the largest player in China’s onshore bond market.
28
China Opportunity RQFII Bond Fund – Key Risks
Key Risks
B
E
C
D
AInterest Risk
Credit Risk
Market Risk
PRC Currency and Tax Risk
RQFII Regime Risk
For more risk disclosures, please refer to the relevant Prospectus
and Key Investor Information Document (KIID).
29
China Opportunity RQFII Bond Fund – Currency Option
Different currency share classes are available
Euro (Unhedged) Euro (Hedged) CNH
China’s Onshore Bond Market
30
China Opportunity RQFII Bond Fund – Profile
Fund Profile
Fund Domicile Luxembourg
Legal Form Sub-fund of ICBC(Europe) UCITS SICAV
Initial Offer Period 17 November 2014 to 16 December 2014
Initiator and Global Distributor ICBC (Europe) S.A.
Investment Manager ICBC (Asia) Investment Management Company Limited
Investment Objectives
Achieve capital appreciation and income generation by investing primarily in
onshore RMB (CNY) fixed income securities issued by issuers based in the
People’s Republic of China (the ―PRC‖) with a tenure of 0 to 5 years.
Initial Fund Size EUR 25,000,000
Currency of Share Class
EURO(Unhedged)
EURO (Hedged)
CNH
Risk and reward profile:1 2 3 4 5 6 7
Lower risk Higher risk
Typically lower rewards Typically higher rewards
31
China Opportunity RQFII Bond Fund – Profile (Continued)
Fund Profile
Liquidity Daily
Minimum SubscriptionFor Institutional investor: EUR 1,000,000 / CNH 10,000,000
For Non-institutional investor: EUR 5,000 / CNH 50,000
Minimum Additional SubscriptionFor Institutional investor: EUR 100,000 / CNH 1,000,000
For Non-institutional investor: EUR 1,000 / CNH 10,000
Subscription Charge Up to 1%
Management Fee 0.5% p.a.
Redemption Fee0.5% if the shareholding period is less than 1 year;
No redemption fee applies if the shareholding period is longer than 1 year
Subscription TaxFor Institutional investor: 0.01%
For Non-institutional investor: 0.05%
Distribution Policy Accumulation shares only (no dividend will be declared)
Registration Countries Luxembourg, France, Belgium, the Netherlands, Italy, Spain
32
China Opportunity RQFII Bond Fund – Profile (Continued)
Share Class Marketed in Belgium
Class I
(for Institutional Investors)
Class I unhedged EUR (ISIN: LU1130473561)
Class I hedged EUR (ISIN: LU1130473488)
Class I CNH (ISIN: LU1130473645)
Class N
(for Non-Institutional Investors)
Class N unhedged EUR (ISIN: LU1130473991)
Class N hedged EUR (ISIN: LU1130473728)
Class N CNH (ISIN: LU1130474023)
33
China Opportunity RQFII Bond Fund – Profile (Continued)
Non-recurring costs to be paid by investors in Belgium
The type of fee
Calculation
(in the currency of the share class as a percentage of the
amount invested)
Subscription Charge
For Class I, 0.5% of the Subscription Amount
For Class N, 0.7% of the Subscription Amount
Redemption Fee
0.5% of the Redemption Amount if the shareholding period is
less than 1 year
No redemption fee if the shareholding period is longer than 1
year
34
China Opportunity RQFII Bond Fund – Profile (Continued)
Tax regime for investors in Belgium*
Individual Investor Resident
Capital gains Withholding tax 25% on the capital gains at redemption.
Corporate Investor Resident
capital gains
Only common corporate income tax, income tax at 33.99%,
but Belgian Pensions Funds and Belgian SICAV are not
subject to this tax.
Tax on Stock Exchange Transactions for Residents
1.32% (with the cap of EUR 2000) on the net asset value of the share at redemption
without any deduction of the lump sum charges but reduced by the withholding tax
withheld. Certain institutional investors may be exempted from this tax.
Non Residents
No tax on capital gains, income and stock exchange transactions for Belgium.
*The applicable tax regime is subject to changes under applicable law.
35
China Opportunity RQFII Bond Fund – Key Documentation
For more information about this sub-fund of the SICAV, please carefully read the following
important documents:
The most recent version of the Prospectus of the SICAV including any Supplement
to it (available in English ONLY);
The Articles of Incorporation of the SICAV (available in English ONLY);
The latest semi-annual, if any, or annual report of the SICAV, if any(available in
English ONLY); and
The latest versions of the Key Investor Information Document (s) (available in
English, French and Dutch).
Copies of these documents may be obtained free of charge during usual business hours
on any full bank business day in Luxembourg at the registered office of the SICAV or on any
bank business day in Belgium at the registered office of ICBC (Europe) S.A. Brussels
Branch or on the following internet site www.fundsquare.net for download, provided you
consent to be provided with these documents in electronic format through the internet.
36
China Opportunity RQFII Bond Fund – Key Notice
Before investing in the SICAV, each time please first read the latest version of the Key
Investor Information Document (s).
You will be obliged to attach to the Trade Instruction-Subscription Form the latest version of
the Key Investor Information Document (s) or insert the date of such document on the Trade
Instruction-Subscription Form. Otherwise, your subscription may be delayed if you abstain
from doing so.
37
Contents
Why Invest In RMB Assets?
Why Invest In ICBC China Opportunity RQFII Bond Fund?
Why Invest In China’s Onshore Bond Market?
Why Invest In RQFII Bond Fund Through ICBC?
38
ICBC – Your First Choice Investment Partner in China
Dominant
Market Position PrudenceSize & ScaleExpertise in
China
ICBC is not only one
of the "big 4 "banks in
China and one of the
largest banks in the
world, we also obtain
the first RMB clearing
mandate outside of
Greater China. ICBC
is also actively
involved in many
recent financial deals
around the globe.
ICBC unrivalled
buisness size and scale
have allowed us to
achieve high efficiency
and enable operational
effectiveness, which
our business partners
can leverage from.
ICBC can leverage
our core competence
and in-depth
knowledge of the
Chinese market to
add value to you,
which is second to
none!
ICBC is renowned
for its prudence and
high standard of
compliance while
well-balanced with its
commercial
decisions, which
many of our business
partners deem as our
competitive edge.
Prudent &
PragmaticUnrivalled
Size & Scale
39
ICBC – Largest Asset Manager in China’s Banking Sector
11852.12
From 2006 to 2013, Volume of wealth management
product issued increased from 117 Billion RMB
to 4.75 Trillion RMB, an annual CAGR of 69%
From 2006 to 2013, Balance of wealth management
product issued increased from 80 Billion RMB
to 1.12 Trillion RMB, an annual CAGR of 46%
By the end of 2013, ICBCAM’s AUM has reached 1.12
Trillion RMB, ranks #1 among the “Big Four” state-owned
banks in China.
0.12 0.25
2.162.51
3.46
4.64
3.98
4.75
0.00
1.00
2.00
3.00
4.00
5.00
6.00
2006 2007 2008 2009 2010 2011 2012 2013
Trillion RMB
0.08 0.16 0.20
0.45
0.61
0.77
1.00 1.12
0.00
0.20
0.40
0.60
0.80
1.00
1.20
2006 2007 2008 2009 2010 2011 2012 2013
Trillion RMB
Asset allocation of underlying assets
ICBC, 29.92%
CCB, 27.03%
BOC, 22.99%ABC, 20.06%
Source: ICBC
40
ICBC – Proprietary Credit Rating System
Credit Rating System
ICBC Corporate Client Database
Access to the largest
and most complete
credit database in
China, ICBC Industrial
and Commercial Client
Database, which is
made up of data and
research provided by
loan officers.
Leverage ICBC’s strong
expertise on credit
analysis and corporate
finance in selecting
bond issuers.
41
ICBC – Rigorous Risk Management
30369.21 9977.84
1. Credit Risk 2. Legal Risk
3. Operational Risk 4. Compliance
5. Liquidity Risk 6. Market Risk
Risk
Management
• Internal rating models
• Strict Credit Review
• Counterparty risk management
• PPM system
• Internal rating models
• Strict Credit Review
• Counterparty risk management
• PPM system
• Duration Matching
• Cash Flow Matching
• Liquidity Planning
• Liquidity Monitoring via PPM
• Dedicated research team to forecast risk
• Real time monitor of Duration, Volatility
and other risk parameters
• Market Stress Testing for Black Swan
events
• Highly automated PPM system,
minimizing human error
• Internal cooperation with compliance team
• External communication with regulators
42
ICBC – Asset Management Team of ICBC Limited
11852.12
Total AUM:RMB 1.12 Trillion (EUR 140 Billion)
Total no. of staff:160
Average no. of years in ICBC : 5 years
Education level:>70% with Master Degree or above
Marketing-5Risk
Management-34Investment-81Research-25
Asset Management Department
Investment Committee-10
Global Asset Mgt
Platform (HK)
Investment
Management
Products &
Marketing
Account &
Operation
Compliance
HR & Admin
Trading-6
ICBCAIM1
1ICBCAIM: ICBC(Asia) Investment
Management Company Limited
43
ICBCAIM – Global Investment Platform of ICBC Group
Shareholding Structure
ICBCAIM is designated as the sole gateway for ICBC
Group’s global asset management activities outside
the PRC.
ICBCAIM is a wholly-owned subsidiary of ICBC (Asia)
in Hong Kong.
Assets under management is USD 600 million.There
are a total of 6 authorized public funds, 4 Qualified
Domestic Institutional Investor (QDII) co-managed
products,5 private funds, including QFII and RQFII
fund.
ICBCAIM3
ICBC(Asia)2
ICBC1
100%
100%
Introduction
Strategic Positioning
License and Quota
Investment adviser and Manager licensed under Hong
Kong Securities and Futures Commission for types 4
(advising on securities), 5 (advising on futures
contracts) and 9 (asset management) regulated
activities.
QFII and RQFII licenses approved by CSRC,100 Million
USD QFII quota and 2.3 Billion RMB RQFII quota.2ICBC(Asia): ICBC(Asia) Limited, Hong Kong
3ICBCAIM: ICBC(Asia) Investment Management Company Limited, Hong Kong
1ICBC: Industrial and Commercial Bank of China Limited, Beijing, P.R.C.
44
ICBCAIM – History of Development
2009
Aug
2009
Aug
Authorized by the Hong Kong Regulator, HKSFC, ICBCAIM launched ICBC (Asia) Investment Fund,
an umbrella fund that offered 5 separate sub-funds – Asia Selection Growth Fund, China & Hong
Kong Vision Fund, Global Total Return Bond Fund, Asia Infrastructure and Redevelopment Fund
and Global Emerging Enterprises Fund.
Launching of the 6th sub-fund, Global RMB Fixed Income Fund, the third authorized fund in Hong
Kong that focusing on the CNH bond investment
Launching of RMB credit fund (private fund)
Signed investment agreement with an African central bank, mandated to manage its RMB investment
portfolio, benchmarking the initiation of cooperation with sovereign wealth funds and close relationship
with African country.
Qualified under the PRC regulator, China Securities Regulatory Commission (CSRC), as Qualified
Foreign Institutional Investor (―QFII‖)
Granted USD100 million QFII quota by the State Administration of Foreign Exchange (SAFE), and
qualified as Renminbi Qualified Foreign Institutional Investor (―RQFII‖)
Granted RMB 800 million RQFII quota by the SAFE
Granted an additional RMB 1.5 billion RQFII quota by the SAFE
Jan 2011
Nov 2011
Jul 2012
Mar 2013
Jun 2013
Jul 2013
Aug 2009
Mar 2014
45
ICBCAIM – Track Record of Existing Products in Hong Kong (1)
Fund Size: RMB 838 million
Inception Date: 30 December 2013
Domiciliation: Hong Kong
Average Rating: Not less than AA+
by local rating agencies
Primary Currency: CNH
Target Clients: Institutional Client
Investment Mandate: China’s onshore
bond market
RQFII Segregated Investment Account1
Investment Objective:
Invest via ICBCAIM’s RQFII quota with the aim to achieve long-term capital and
interest income returns, by investing in fixed income securities in China, including
but not limited to, China inter-bank and exchange-traded bonds, certificate of
deposits, cash and bank deposits.
Source: ICBCAIM
1This is a separate investment procuct domiciled in Hong Kong, nothing to do with the ICBC(Europe) UCITS SICAV.
46
ICBCAIM – Track Record of Existing Products in Hong Kong (1)
RQFII Segregated Investment Account
0.41%
96.57%
3.02%
Cash
Credit Bonds
Money Market fund
0.41%
46.71%
49.86%
3.02%
Cash
AAA
AA+
Money Market fund
Asset Allocation Rating Allocation
RQFII Segregated Investment Account
Yield to Maturity 4.68%
Modified Duration 0.69
Since Inception Return 4.77%
Estimated Annualized Return 7.24%
As of 29 August 2014
Source: ICBCAIM
47
ICBCAIM – Track Record of Existing Products in Hong Kong (2)
Fund Size: USD 23 million
Domiciliation: Hong Kong
Inception Date: 1 November 2013
Primary Currency: USD
Target Clients: Institutional Investors
Investment Objective:
Invest via ICBCAIM’s QFII quota with the aim to achieve long-term capital and
interest income returns, by investing in a mixture of fixed income securities and
equities, including but not limited to, China inter-bank and exchange-traded bond
markets, China A-Shares, IPOs, security investment funds, cash and bank deposits.
QFII - China Prosperous Opportunity Fund1
Source: ICBCAIM
1This is a separate investment procuct domiciled in Hong Kong, nothing to do with the ICBC(Europe) UCITS SICAV.
48
ICBCAIM – Track Record of Existing Products in Hong Kong (2)
The Fund will allocate its investment in proportion as listed below. In the first 6 months
the bond and cash allocation can be higher than 50%.
The Fund will timely adjust the asset allocation ratio based on market condition and
economic development.
QFII - China Prosperous Opportunity Fund
Investment Instruments Asset Allocation Proportion
Bonds (including both inter-bank and exchange bond markets)
0-50%
Equity and Equity Investment Funds 50-100%
Cash and Banks Deposits 0-20%
Warrants、Equity Index Futures and other
related investment instruments In compliance with regulation
Source: ICBCAIM
49
ICBCAIM – Track Record of Existing Products in Hong Kong (2)
QFII - China Prosperous Opportunity Fund
China Prosperous Opportunity Fund
Yield to Maturity 5.17%
Modified Duration 1.74
Since Inception Return 3.13% (in USD) 4.04% (in CNY)
Average Rating AA+
As of 29 August 2014
Asset Allocation Rating Allocation
0.64%
95.83%
3.53%
Cash
Credit Bonds
0.64%
28.67%
52.88%
14.28%
3.53%
Cash
AAA
AA+
AA
Source: ICBCAIM
50
ICBCAIM – Track Record of Existing Products in Hong Kong (3)
Investment Objective: To achieve consistent and competitive investment returns, comprising steady income
and capital growth by investing in a mixture of international fixed income securities and related instruments
ICBC Global Total Return
Bond FundCitigroup WorldBIG Index
Yield to Maturity 5.17% 2.15%
Modified Duration 3.14 5.33
2009 Return
(From 31 Aug 2009 to 31 Dec 2009)1.85% 0.97%
2010 Return 11.35% 4.28%
2011 Return 3.61% 5.51%
2012 Return 11.43% 5.62%
2013 Return -2.04% -0.05%
Since Inception Return 32.79% 24.02%
Fund Size: HKD100 million
Domiciliation: Hong Kong
Target Clients: Retail Investors
Inception Date: 31 August 2009
As of 29 August 2014
Source: ICBCAIM
51
ICBCAIM – Track Record of Existing Products in Hong Kong (3)
(As of 29 Aug 2014)
%38%
26%
35%
1%
Rating Allocation
Investment Grade High Yield Non-rated Cash
93%
6% 1%
Security Allocation
Fixed Rate Debt Sub-Debt Cash
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
20
09-9
-12009-1
1-1
20
10-1
-12
01
0-3
-12
01
0-5
-12
01
0-7
-12
01
0-9
-12010-1
1-1
20
11-1
-12
01
1-3
-12
01
1-5
-12
01
1-7
-12
01
1-9
-12011-1
1-1
20
12-1
-12
01
2-3
-12
01
2-5
-12
01
2-7
-12
01
2-9
-12012-1
1-1
20
13-1
-12
01
3-3
-12
01
3-5
-12
01
3-7
-12
01
3-9
-12013-1
1-1
20
14-1
-12
01
4-3
-12
01
4-5
-12
01
4-7
-1
Return Since Inception (%)
58%
11%
7%
5%4%
4% 10%1%
Country Allocation
China India
Hong Kong Russia
Brazil South Korea
Others Cash
33%
12%
12%
10%
9%
7%
6%4% 4%2% 1%
Sector Allocation
Financial TechnologyProperties IndustrialCommunications DiversifiedConsumer, Cyclical Consumer, Non-cyclicalBasic Materials UtilitiesCash
Portfolio Profile
Source: ICBCAIM
52
ICBCAIM – Track Record of Existing Products in Hong Kong (4)
ICBC Global RMB
Fixed Income Fund
Citigroup Dim Sum (Offshore CNY)
Bond Index Investment-grade
Yield to Maturity 5.67% 3.36%
Modified Duration 1.56 2.81
2011 Return
(From 31 Jan 2011 to 30 Dec 2011)-3.44% -0.63%
2012 Return 5.58% 2.16%
2013 Return 4.83% 2.42%
Since Inception Return 9.87% 6.49%
CNH Appreciation Since Inception 7.11% 7.11%
Total Return Since Inception 16.98% 13.60%
As of 29 Aug 2014
Fund Size: CNH 67 million
Domiciliation: Hong Kong
Target Clients: Retail Investors
Inception Date: 31 January 2011
Investment Objective: Achieve consistent and competitive investment returns, comprising steady income
and capital growth in RMB terms through investing in RMB denominated Debt Securities which are issued or
distributed outside mainland China.
Source: ICBCAIM
53
ICBCAIM – Track Record of Existing Products in Hong Kong (4)
(As of 29 Aug 2014)
Portfolio Profile
%
91%
6% 3%
Security Allocation
Fixed Rate Debt Sub-Debt Cash
14%
26%57%
3%
Rating Allocation
Investment Grade High Yield
Non-rated Cash
24%
24%
15%
14%
9%6%
5% 3%
Sector Allocation
Financial Property
Communications Consumer, Cyclical
Diversified Utilities
Consumer, Non-cyclical Cash
73%
16%
8% 3%
Country Allocation
China Russia HONG KONG Cash
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Ja
n-1
1
Ma
y-1
1
Au
g-1
1
Nov-1
1
Feb
-12
Ma
y-1
2
Au
g-1
2
Nov-1
2
Feb
-13
Ma
y-1
3
Au
g-1
3
Nov-1
3
Feb
-14
Ma
y-1
4
Au
g-1
4
Total Return and Return Since Inception (%)
Return Since Inception
Total Return (including RMB appreciation)
Source: ICBCAIM
54
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55
ICBC (Europe) S.A. Investment Fund Platform
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56
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ICBC (Europe) S.A. – European Gateway to China
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