Allianz Global Investors, part of Allianz SE (ALV.XE), said
Wednesday that it had reopened its renminbi fixed-income fund,
citing increased interest and a greater level of development in the
offshore renminbi bond market.
The decision to reopen the fund, which invests primarily in high
grade offshore yuan--or CNH--bonds, follows a year of soft closure,
whereby Allianz Global Investors stopped further subscriptions to
the fund.
Helen Lam, the Hong Kong-based lead portfolio manager of the
fund, said the decision to reopen was "largely driven by the
reduced size of the portfolio and the increased liquidity in the
market." She also highlighted some positive developments in the
offshore renminbi market in terms of tradeable volume, liquidity,
and daily conversion limits.
It is fairly common for open-ended funds, particularly those
operating in small, illiquid markets, to close their doors
temporarily to new investment, in an effort to maintain quality and
performance.
Allianz soft-closed the Luxembourg-domiciled fund in August 2011
to preserve liquidity after assets under management reached 450
million euros ($555 million) in the two months following its launch
in June 2011. Since then the assets under management have shrunk to
EUR359 million as of August 13. Meanwhile, the underlying market
has developed enough to absorb larger investments.
"The CNH bond market has witnessed strong supply and demand
growth year-to-date 2012, reflecting the fact that off-shore RMB
bond market has developed into a more mature stage where investors
no longer aim for pure currency appreciation," said Ms. Lam.
She added that she also sees transaction turnover in the
offshore yuan--also referred to as CNH--market continuing to pick
up pace, with the size of Hong Kong's offshore renminbi pool
approaching an all-time high. This should ease market concerns on
the liquidity of offshore yuan, she explained.
While recent fundamental and cyclical factors in China seem to
suggest a softening renminbi appreciation outlook, Ms. Lam also
believes that the pace of RMB appreciation will remain stable.
Write to Jessica Mead at jessica.mead@dowjones.com