BlackRock (NYSE: BLK), the world’s largest asset manager and parent company of iShares, the world’s largest ETF issuer, has earned its first renminbi qualified foreign institutional investor (RQFII) licence by the China Securities Regulatory Commission (CSRC).
“The licence has been awarded to BlackRock Asset Management North Asia Limited, a subsidiary of BlackRock Inc, to invest in the domestic capital markets in China, including the A-Share equity and onshore bond markets. BlackRock will apply for investment quotas under the licence from the State Administration of Foreign Exchange (SAFE),” according to Asia Asset Management.
RQFII status is essential for investment firms to be a foreign owner of A-shares. China’s A-shares trade in Shanghai and Shenzhen.
Although BlackRock has not commented to this effect, nor did the Asia Asset article mention as much, RQFII status would allow the company to sponsor an exchange traded fund that offers direct access to A-shares equities.
Issuers of physical A-shares ETFs currently on the market, including the db X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR) and the KraneShares Bosera MSCI China A ETF (NYSEArca: KBA), partnered with local asset managers to gain RQFII status.
Following the launch of ASHR last year, Deutsche Bank filed plans with the Securities and Exchange Commission to launch a suite of China A-shares sector and market cap exchange traded funds to provide investors with direct access to various Chinese equity plays. The bank has filed plans for small-cap and consumer staples, financial services and technology equivalents, among other sectors, of ASHR. [More A-Shares ETFs Could Launch]