By Park Hyong-ki
Staff Reporter
Chinese and Hong Kong stocks will continue to provide good opportunities for Korean investors to reap impressive gains going forward given China's positive economic prospects, said a chief investment officer of Korea Investment & Securities Asia from Hong Kong.
``The market outlook for China continues to be rosy, posting an average GDP growth of 10 percent annually, on expansion in fixed asset investments or infrastructure and exports,'' said CIO Albert Ng at a press conference in Seoul Thursday. Korea Investment & Securities Asia is a Hong Kong subsidiary of Korea Investment Trust Managment.
Korea Investment Trust Management, a domestic asset management firm led by Chief Executive Chung Chan-hyoung, has set up the Hong Kong unit, which will manage its ``Greater China Fund,'' investing in Hong Kong H shares and red chips. The fund will be launched by the end of this month.
The H-share index, or China Enterprises Index, tracks Hong Kong-listed Chinese companies that conduct businesses mostly in the mainland. The red chip index, or the Hang Seng China-Affiliated Corporations Index, tracks shares of companies established in Hong Kong whose major shareholders are the Chinese government and its state-run entities.
Since China is shifting its economic focus on price and volume for growth to being a value-added one like that of Taiwan and Korea, its outlook remains solid.
Deregulation in investment in Hong Kong shares for Chinese investors by the mainland will further promote H and red chip shares, said Ng.
Korean investors, whose interests in overseas funds are growing, will be able to tap into those equities at a time when their values are gaining momentum, closing in on China's A shares on the Shanghai stock market.
Investment in overseas equity funds accounts for about 40 percent, and CEO Chung believes, ``It's just a matter of time before those funds match with funds investing in domestic equities in terms of net asset value.''
To this end, the chief executive said the asset management firm decided to expand in Hong Kong, which serves as the gateway to China, the world's fastest growing consumption market.
Strong GDP in China and Hong Kong's free financial regulatory environment is the main reason Korea Investment chose to build its unit in Hong Kong rather than Singapore. Its Hong Kong unit will conduct three primary businesses _ investment, asset management and brokerage.
The company said it plans to build up its Hong Kong unit to become its investment center in Asia.
Additionally, it is seeking approval from the Chinese financial authorities to allow its Hong Kong unit to develop a fund to invest in the mainland's A shares, which are restricted to foreign investors.
China is keeping its A shares off limits to foreigners before it cools down the main stock market in Shanghai that has been overheating along with its economy.