The Bank of China Hong Kong (BOCHK) is betting big on Beijing's "Greater Bay Area" initiative and it apparently wants foreign investors to get in on the action. The asset management unit of the bank launched a new bond fund, called the BOCHK All Weather Greater Bay Area Strategy Fund, in Macau and Hong Kong earlier this week. The fund is meant to be spent on the region covered by Beijing's ambitious initiative. According to the bank, it expects more than US$150 billion in new capital that will eventually trickle down into the country's bond market over the next few years.
The chief executive of BOCHK Asset Management, Shen Hua, announced that its new fund will be the first of its kind to specifically focus on the Greater Bay Area. She believes that the area does have great potential for growth not only in terms of business but in returns to investors as well. The executive pointed out that the Greater Bay Area is currently experiencing a higher GDP growth rate compared to its counterparts, including the Tokyo Bay Area and the San Francisco Bay Area.
Shen also added that the fund will be taking full advantage of Hong Kong's unrivaled strength in the financial sector as well as the rapidly developing financial networks from places such as Guangzhou and Shenzen. The executive used these points to promote the new fund, which he thinks will be a massive success. The fund itself will become available starting this week up until April 8. It will then be traded as an open-ended fund after that date.
The capital generated by the fund will be used to invest in government issued bonds as well as in companies that are operating in the Greater Bay Area. The BOCHK Asset Management team has great confidence in the fund given China's ambitions of linking together the different economic powerhouse cities to form an integrated economic and business hub.
According to the fund management team, it is seeing a potentially large amount of foreign capital flow to emerging markets given the US Federal Reserve's dovish stance with interest rates. It also expects more and more companies in the Greater Bay Area to issue US Dollar bonds with higher yields in the months that will follow, which should result in greater gains for early investors. The minimum investment for the new fund is around US$1,000 or HK$10,000 with a minimum term of three years. The fund management team is targeting dividend payouts in as early as three months after the fund begins selling.
