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ICBC ends deal with Credit Suisse as adviser to fund JV

(Agencies)
Updated: 2009-02-24 15:01

Industrial and Commercial Bank of China's (ICBC) fund venture with Credit Suisse said on Tuesday it has ended an overseas investment consulting agreement with the Swiss bank after building up its own asset management expertise.

The venture, whose year-old overseas investment fund has lost nearly half its value since its launch, said it was the first to cancel its foreign adviser arrangement but predicted more Chinese funds would follow suit as they gain experience investing overseas.

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"This should be China's first QDII (qualified domestic institutional investor) product to invest abroad independently," said Li Datao, a marketing representative at ICBC Credit Suisse Asset Management Co.

"I believe that as more Chinese talent with overseas investment experience returns home, more QDII products will become independent."

The venture's Global China Opportunity Equity Fund was launched in February 2008 under China's QDII scheme, which allows Chinese mainlanders to invest in overseas markets.

Chinese fund managers, banks and brokerages scrambled to team up with overseas investment banks such as Credit Suisse, Goldman Sachs and Lehman Brothers Holdings to sell overseas investment products after the government launched the QDII scheme in 2006.

But the ensuing global financial crisis slashed the value of QDII products and sapped investor demand. As of Feb 6, ICBC Credit Suisse's QDII fund posted net assets per unit of 0.556 yuan, compared with a face value of 1 yuan.

In September 2008, China's first QDII fund, managed by Hua An Fund Management Co, halted redemptions after the collapse of Lehman Brothers, its overseas investment adviser and business partner.

When the venture launched its QDII fund a year ago, it hired Credit Suisse to help invest in non-Chinese firms, which account for 50 to 70 percent of the fund's portfolio. Many QDII funds focus on Chinese firms listed overseas.

But now, the venture, 55 percent controlled by ICBC, China's biggest lender, has several experienced QDII fund managers of its own, giving it the ability to manage all of its assets, the company said in a statement.

Analysts said, however, that the government was still likely to urge funds to take a cautious approach to overseas investing and maintain ties to foreign advisers.

"I think regulators still want to see Chinese funds use foreign expertise investing overseas because they still lack adequate experience," said Zhang Haochuan, an analyst at Shanghai-based fund consultancy Z-Ben Advisors Ltd.