Swiss Re, which recently won a RQFII (Renminbi Qualified Foreign Institutional Investor) license, plans to invest mostly on Chinese government and government-related fixed income securities, according to the company’s spokesperson.
“The RQFII will be used for duration matching of liabilities in yuan and we will primarily invest in government and government related fixed income products. The size of the investment will be a function of our continued business growth in China,” said Carolyn Bandel, senior media relations manager at Swiss Re, in an emailed response to NexChange questions.
Swiss Re is the first Swiss company to be awarded a RQFII license and it is now applying for a quota from the Chinese government. The quota will be determined by the government and not by the company that’s applying for it, said Bandel.
The reinsurer’s RQFII license is part of the 50 billion yuan ($8.1 billion) quota the Chinese government has granted to Swiss financial institutions in January.
Bandel said investing in China’s domestic market is part of the firm’s overall growth strategy:
“Gaining access to the Chinese financial markets as they grow in significance has become vital for global long-term investors. This is an important step in Swiss Re’s business aspirations under our high growth market strategy. “
China has opened up its capital market to offshore investors through RQFII and other schemes such as the Shanghai-Hong Kong Stock Connect which linked the stock exchanges of the two territories.
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