Yuan Market Access Lags Sovereign Investor Demand, Invesco Says

Sovereign investors’ access to China’s capital market is lagging behind demand, according to a survey.

Some 43 percent of central banks and 35 percent of state investors surveyed in the Invesco Global Sovereign Asset Management Study 2015 said they are looking to invest in yuan assets. So far, only 30 percent of the monetary authorities and 10 percent of the sovereign funds have quotas to invest in the onshore market, according to the survey results released Monday.

Invesco interviewed 59 investors that oversee $7.09 trillion of assets, including central banks, sovereign wealth funds and pension funds. Of the entities surveyed, 15 had more than $100 billion of assets under management, according to the study, which didn’t name the investors.

Higher interest rates and diversification needs are driving demand for yuan assets among state investors, said Lindsay Wright, Invesco’s Hong Kong-based head of institutional sales, alternatives and investment solutions for Asia Pacific. “While there’s strong demand for getting access, obtaining the quotas is outside of their control,” she said in a June 3 interview.

China is bolstering global use of the yuan as it seeks to win reserve-currency status at an International Monetary Fund review later this year. The People’s Bank of China last week allowed overseas banks to borrow funds in the interbank bond market via repurchase facilities for use abroad.

State investors will allocate more funds to infrastructure investments in emerging markets to meet long-term return targets, the survey showed.

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