Anthony Bolton’s China special situations trust and Fidelity Investment Managers Hong Kong have received a permit to invest in Chinese mainland A shares.
Investors who wish to access the Chinese A shares market have to apply for a permit. Once they have been given a permit, they will be awarded an investment limit.
A spokesperson confirmed Fidelity has been given the permit but says they have not been told the limit they have been awarded. Such licenses are not awarded to individuals but to an investment manager. However, once the facility becomes available Bolton will be able to access the A shares market.
At admission, the investment manager did not have a Qualified Foreign Institutional Investor (QFII) license. Bolton’s China special situations investment trust sought exposure to Chinese A shares through indirect investment.
Yet the prospectus of the investment trust hinted it may, at some point in the future, invest in A shares both directly through the QFII licence and indirectly through other investments, including equity linked securities, derivatives and collective investment schemes.
China’s stocks are listed as A shares, B shares and H shares. China B Shares, which are payable in foreign currency, were originally developed to enable foreign investors access to the Chinese stockmarket.
A shares, on the other hand, are only for residents of the Chinese mainland. There are more than 10 times the number of A shares versus B shares.
Foreign investors have traditionally struggled to access mainland China. Class B share initial public offering activity has been inactive since about 2001, meaning there are far more companies with IPO A shares.