CHINESE asset management firm CSOP said it has started applying for new quotas for its newly listed yuan exchange-traded fund (ETF) in London due to strong demand, signaling international investors’ growing appetite for yuan assets.

    The fund, which tracks the FTSE China A50 Index to allow investors to have exposure to the top 50 companies on the Chinese mainland, has exhausted 1.45 billion yuan (US$239.60 million) of its 1.5 billion yuan quota, only two weeks after its launch.

    It is the first Renminbi Qualified Foreign Institutional Investor (RQFII) exchange traded fund (ETF) available in London, after the firm listed another yuan ETF in Tokyo tracking CES China A80 Index a year earlier.

    “We’ve seen a lot of demand from institutional investors in Europe, especially insurance companies and family offices,” said Ding Chen, chief executive officer at CSOP Asset Management, which managed US$5.7 billion assets as of end-2013.

    “We did a series of roadshows in Europe recently and found that interest in yuan products is not only from Germany and Switzerland where investment demand is usually strong, but also from countries like Itlay,” Ding added.

    Ding said the firm is also considering capitalizing on London’s 80 billion yuan RQFII quota for the fund, whose manager is London-based Source.

    The RQFII scheme, launched in 2011, allows financial institutions to use offshore yuan to invest in the mainland securities markets, including stocks, bonds, and money market instruments.

    As of Dec. 25, a total of 157.5 billion yuan of quotas had been approved for 52 RQFII licences under the 270 billion yuan quota granted to Hong Kong.

    Britain’s Ashmore also kicked off London’s quota earlier this month.

    As China’s currency outperforms in the region, global investors have started to add yuan assets to their portfolios to diversify risks.

    Ding said the company is studying whether to list more yuan products in European cities, such as Frankfurt, to meet such needs.

    CSOP is not alone in expanding its yuan business roadmap. China’s Harvest Global Investments partnered with Deutsche Asset and Wealth Management in December and listed the first yuan ETF in the United States.(SD-Agencies)