Money in the Air

With 364,000 high net worth individuals in China hailing more than USD1Mn each, there is a lot of money in the air to spend or invest. Private equity funds are making a foray into China, setting up funds denominated in yuan. This compares to a concentration on foreign private equity firms like TPG and Carlyle Group, primarily investing capital in China on behalf of international investors in the past. Latest entrants to tap the mainland yuan market include Asian brokerage CLSA which targets to raise 10Bn yuan in conjunction with JV partner, Shanghai Guosheng Group, and the Hong Kong-based First Eastern Investment Group, targetting to raise 6Bn yuan. Blackstone Group also previously announced that it plans to raise a 5Bn yuan fund for direct investments in China.

By the same token, to further stimulate capital utilization, the Chinese government raised the maximum amount a single qualified foreign institutional investor ‘s investment (QFII) in the stock market to USD1Bn from the current USD800 Mn. This became effective on September 29, and we did see the mainland stock market soared on October 9, its first trading day after the national holidays. At the end of September, there are 78 foreign institutions holding QFII quotas totalling USD15.72 Bn.

At the same time, foreign domestic institutional investment programme (QDII) numbered at 56, with a total investment quota of USD55.95Bn. This allows China domestic investors to invest in overseas securities.

The conclusion on where the money is, is obvious ~~

The nouveau riche, la Chine!