ICBC (Europe) UCITS SICAV China Opportunity RQFII Bond Fundv.icbc.com.cn/userfiles/Resources/ICBC/haiwai/Brussels/... · 2015-04-20 · ICBC (Europe) UCITS SICAV – China Opportunity

ICBC (Europe) UCITS SICAV –

China Opportunity RQFII Bond Fund

March, 2015

FOR MARKETING PURPOSES ONLY

* Please read the disclaimer at the end of this marketing material.

Financial Service Provider in Belgium: ICBC (Europe) S.A. Brussels Branch

Net Asset Value Publication: www.fundspare.com and www.beama.be

http://www.fundspare.com/

http://www.beama.be/

2

Contents

Why Invest In RMB Assets?

Why Invest In ICBC China Opportunity RQFII Bond Fund?

Why Invest In China’s Onshore Bond Market?

Why Invest In RQFII Bond Fund Through ICBC?

3

The Rise of China’s Economy and Its Currency

Source: IMF

Proportion of world GDP for the countries

with the top 10 highest nominal GDP

Source: Bloomberg

Source: Bloomberg

4

The Formation of China’s Onshore and Offshore Market

Historically, the value of the RMB was pegged to the U.S. dollar

Time

2005

2007

Origins

Introduction of a floating RMB

The RMB slowly started to float in a narrow margin at a fixed base rate reference to

a basket of world currencies.

The flexibility of the exchange rate gradually increased. China has initiated various

pilot projects to "internationalize" the RMB.

Hong Kong has been developing an offshore deposit market for RMB.

Launch of the “Dim Sum Bonds” in Hong Kong

A major step has been achieved when the Chinese government allowed companies to issue RMB denominated debt in Hong Kong, so-called Dim Sum Bonds.

Hong Kong’s offshore market allowed both non-Chinese individuals and corporates to own RMB, but still with strict limits on the volume.

Today Offshore and Onshore markets

Due to capital controls, there are two parallel markets for the RMB: the onshore RMB (CNY) market and the offshore RMB (CNH) market.

5

The Way for RMB Internationalisation

Trading Currency1 Investment Currency2 Reserve Currency3

6

Development of RMB as International Settlement Currency

Sources: CEIC, IMFSources: SWIFT

Cross-Border Trade Settlement

(In RMB bn)

RMB & World Payments Currency in Value

The market saw stronger SWIFT payments and higher RMB trade settlement percentages

compared with 2013. RMB reinforced its position as the 7th most active currency for global

payments and accounts for 1.55% of payments world.

More corporate treasurers hold RMB in their book.

7

Rapid Growth of Offshore RMB Deposits

Offshore RMB deposits in RMB hubs such as Hong Kong, Singapore, London and

Luxembourg, have seen a rapid growth since 2010. For instance, there are 148 authorized

institutions engaged in RMB business in Hong Kong, RMB deposits amount to RMB 1 trillion in

June 2014, 15 times of the amount in 2010.

925.9

14.1

220

79.4

Offshore RMB deposits

Hongkong London

Singapore Luxembourg

Source: Hong Kong Monetary Authority

RMB bnRMB m

8

Significant Growth in Global Asset Allocation

RMB denominated assets have gained momentum and demonstrated a significant growth in global

asset allocation. Since 2010, offshore RMB bonds grew from USD 12 billion to USD 74

billion, representing an annualized growth rate of 60% in the relative stable offshore global bond

market.

Source: BIS

USD bn

9

Access into/out of China through QFII, RQFII and QDII

Onshore Market Offshore Market

RMB Qualified Foreign

Institutional Investor

“RQFII”

Qualified Foreign


“QFII”

Qualified Domestic


“QDII”

Mainland

China

10

More Liberal Polices Towards RMB

270

80 50

80

80

80

100

Breakdown of RQFII Quota

HongKong London Singapore

France Korea German

Taiwan

0

50

100

150

200

250

300

0

10

20

30

40

50

60

70

80

90

100

QFII, RQFII and QDII Approved Quota, 2003-2014

RQFII(RMB) QDII(USD) QFII(USD)

59.7 bn

82.5 bn

278.6 bn

China has adopted a more liberal open policy to enhance RMB globalization. Through the issuance

of QDII/QFII/RQFII schemes and various territorial based liberation (including the Free Trade Zone

establishment) together with the recent enhancement from State Administration of Foreign Exchange

(SAFE), the market has a concensus that the supply and repatriation of offshore RMB will create

sustainable opportunities for global asset allocation.

Source: CSRC, SAFE

RMB bn

11

Increasing Central Bank Interest in Bilateral Currency Swap

People’s Bank of China (PBoC) has already established bilateral currency swap agreements for

approximately RMB 2.7 Trillion with 25 central banks and monetary authorities.

UK

To be the first western

country to issue government

bonds denominated in RMB

●

Central banks/Monetary authorities have already drawn RMB

funds from currency swap line

Source: PBoC

12

Great Potential On the Way for RMB Internationalisation

Source: Bloomberg, ORI Index

13

Contents





14

Comparison of Offshore VS Onshore Bond Market

Dim Sum Bond Market Onshore Bond Market

Currency CNH (offshore RMB) CNY (onshore RMB)

Market Size CNH 568 Billion CNY 33 Trillion

Issuer CompositionChina/HK 77%,

Europe 5%, others 18%China 100%

Corporate Bond Rating

AgenciesInternational rating agencies

(S&P, Moody’s, Fitch)

Local rating agencies

(Dagong, Chengxin, Lianhe)

Rating Composition Rated bonds and CDs: 38% More than 90% are rated

Basic Yield

Comparison5Y government bond: 2.97%

10Y government bond: 3.93%



Liquidity (per ticket) CNH 10-20 million CNY 50-100 million

Accessibility Free Via approved quota (e.g. QFII and RQFII)

Tax No withholding tax (WHT)10% WHT on coupon/dividend income

10% provisional WHT on capital gain

Onshore bond market is significantly larger than the Offshore bond market

Source: CSRC, HSBC, S&P, Moody’s, Fitch

15

China’s Onshore Bond Market – Too Big To Ignore

Source: BIS

China’s domestic bond market has grown to become the world’s third-largest, only after

the US and Japan.

Outstanding bonds stood at USD4.9trn as of end 2013, up 13% from a year earlier.

Annual gross issuance reached USD1.5trn in 2013, rising 12.5% from 2012.

16

China’s Onshore Bond Market – At a Glance

Interbank Bond Market Exchange Market OTC

Description

Banks were allowed to trade in this

market since 1997

As of April 2014, there are 85 foreign

banks, 9 foreign insurance

companies, 24 RQFIIs and 1 QFII

Market size shrank significantly after banks

switched to interbank market in 1997

In 2009, listed commercial banks were

allowed to trade bonds in this market and in

2013, they were allowed to issue bond in

this market as well

• It was set up in 2002 to

expand the investor base of

Treasuries

• It offers limited product and

has very small trading volume

Trading Volume 98% 2% 0%

Amount

Outstanding95% 3% 2%

Investor Institutional Institutional and Individual Individual

Bond Traded

Treasuries; PBoC bills; Municipal

bonds; Gov-backed institution bonds;

Financial bonds; Enterprise bonds;

MTNs; Commercial papers; ABN,

RMBS, CDO, Privately placed notes;

NCDs

Treasuries; Municipal bonds; Enterprise

bonds; Corporate bonds; ABS; Convertible

bonds;

Treasuries; Gov-backed

institution bonds; Enterprise

bonds;

Custodian CCDC1, SCH2 CSDC3 ---

Regulator PBoC4 CSRC5 CBRC6

China’s onshore bonds are traded in three different markets in China

1CCDC: China Central Depository and Clearing Corporation 2SCH: Shanghai Clearing House 3CSDC: China Securities Depository and Clearing Corporation 4PBoC: People’s Bank of China 5CSRC: China Securities Regulatory Commission 6CBRC: China Banking Regulatory Commission

Source: PBoC, CSRC, HSBC

17

Onshore Market Investing Channels for Overseas Investors

Qualified Foreign

Institutional

Investors (“QFII”)

Foreign central banks

and SWFs

RMB clearing banks and

settlement banks

Supra-nationals and

Insurance companies

PBoC Interbank

Investment Program

RMB Qualified

Foreign

Institutional

Investors (“RQFII”)

Interbank market Exchange Market

Mark

et

Ch

an

nels

Reg

ula

tory

Bo

die

s

18

Characteristics of the Onshore Bond Market

16%

3%

1%

34%

1%

19%

23%

3%

Bond Trading Volume by Bond Type

Treasury Bonds Central Bank Bills

Local Government Bonds Policy Bank Bonds

Commercial Bank Bonds Corporate Bonds

MTNs Others

64%

20%

2%10%

3%

1%

Bond Trading Volume by Investor Type

Commercial Banks Securities Companies

Special Members Funds Institutions

Credit Cooperative Banks Others

Source: www.chinabond.com.cn

Bond trading volume amounted to RMB37trn in 2013 in the interbank market. Policy bank

bonds, Treasuries and Corporate bonds are the main bond types in spot trading.

Commercial banks are the major investors in the interbank bond market. Bond trading volume of

commercial banks accounted for 64% of total market size in 2013.

19

Characteristics of the Onshore Bond Market

Source: www.chinabond.com.cn

55%

15%

13%

1%9%

7%

Bonds Outstanding by Rating

AAA AA+ AA AA- Others Unrated

22%

60%

8%

2%3%

4% 1%

Bonds Outstanding by Sector

Financials Governments Industrials Materials

Utilities Energy Others

Over 50% of the domestic credit bonds are rated as AAA by domestic rating agencies. Only 9% of

credit bonds are rated below AA-.

In terms of sectors, the government is the single largest issuer with around 60% of total issuance

size while the financial sector is the second largest.

20

Onshore Bond Market Provides Higher Yields

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

1M 3M 6M 1Y 2Y 3Y 4Y 5Y 7Y 8Y 9Y 10Y 15Y 30Y

%Government Bond Yield Curve

China (Onshore) China (Offshore) US Germany UK Japan

Source: Bloomberg, as of 23 May 2014

The fast developing fixed income market in China, both onshore and offshore, provide attractive

investments as RMB internationalise.

The yields on government bonds are much higher than other major countries at all maturities.

21

Onshore Bond Market Offers Global Diversification

China’ onshore bond market provides attractive returns with global diversification.

Unlike the downward trend in developed country bond yields over the past 30 years, China’s

onshore 10-year government bond yield has fluctuated in a narrow range, given China’s

more stable interest rate cycle.

10-year government bond yield

Source: BloombergSource: Wind, Bloomberg

Annualized Return (USD Hedged) and Correlation of

BofA ML Major Government Bond 1-10Yr indices with

US Treasury 1-10Yr index. Since 2005

Germany

Bunds

22

Credit Risk Is Real But Containable

NO. of

Issuers Defaults Default%

NO. of

Issuers Defaults Default%

AAA 209 0 0.00% 283 0 0.00%

AA+ 229 0 0.00% 339 0 0.00%

AA 411 1 0.24% 751 0 0.00%

AA- 269 1 0.37% 395 0 0.00%

A+ 67 0 0.00% 81 0 0.00%

A 27 0 0.00% 21 0 0.00%

A- 38 0 0.00% 43 2 4.65%

BBB 47 1 2.13% 51 1 1.96%

BBB+ 52 3 5.77% 103 1 0.97%

BBB- 52 0 0.00% 72 1 1.39%

BB+ 15 1 6.67% 26 0 0.00%

BB 3 0 0.00% 3 0 0.00%

B 0 0 0.00% 1 0 0.00%

B- 0 0 0.00% 1 0 0.00%

CC 0 0 0.00% 1 0 0.00%

Total 1419 7 0.49% 2171 5 0.23%

2012 2013

Issuer

Rat ings

Source: China Lianhe Credit Rating

Investment grade (AA+ and above) stays intact.

Defaults happened mainly in the non-investment grade space.

Overall default rate remains low.

23

Share Class Hedging Analysis on Interbank Bond Market

Source: Brown Brothers Harriman calculations, Reuters

The purpose of the share class hedging analysis is to present the simulated performance

of the local index (ChinaBond Inter-bank Bond Index) hedged to EUR.

Local CNH Unhedged EURSimulated Hedged EUR

Share Class

Total Return 18.72% 22.37% 13.54%

Annual Return 5.34% 6.38% 3.87%

Annual Standard Deviation 0.88% 8.67% 1.00%

Annual Tracking Error — 8.61% 0.50%

Annual Transaction Costs — — 0.27%

＊31 December 2010 to 30 June 2014

The tracking error of this program would have been 50 bps per annum over the period of

12/31/2010 to 30/06/2014, while transaction costs for the period were 27 bps per year.

The share class hedging program performs a sensitivity analysis with hedge ratio

filters, seeking to simultaneously minimize tracking error and transaction costs.

The analysis indicates a 1.0% hedge ratio filter would have balanced the tradeoff between

tracking error and transaction costs, while limiting the number of annual intra-month trades

to only 4-5 events per year.

24

Share Class Hedging Analysis on Interbank Bond Market

Source: Brown Brothers Harriman calculations, Reuters

25

Contents





26

ICBC (Europe) UCITS SICAV – Structure

Auditor Legal Advisor

ICBC (Europe) S.A.

UCITS SICAV *

Management Company

Appoint

Central Administration Distribution

ICBC (Europe) S.A.

Delegate

ICBC

Depository

Appoint

Third-party

Portfolio Management

China Opportunity

RQFII Bond Fund

Sub-Fund

*ICBC (Europe) UCITS SICAV is an investment company organised under the laws of the Grand Duchy of Luxembourg

as a société d’investissement à capital variable and is governed by Part I of the UCI Law and qualifies as a UCITS.

ICBC(Asia) Investment

Management Company Limited

Brown Brothers Harriman

(Luxembourg) S.C.A.

Brown Brothers Harriman

(Luxembourg) S.C.A.Ernst & Young S.A.

RBS (Luxembourg) S.A.

Board of the SICAV comprised

of two Directors from ICBC Group

and one Luxembourg-based

Independent Director.

27

China Opportunity RQFII Bond Fund – Key Features

Onshore BondHigh Yield and

Containable Credit Risk

Local Expertise Leverage Expertise

From ICBC and local

partners

CurrencyRMB Exposure

At Your Discretion

With ICBC (Europe) UCITS SICAV, investors stand to benefit from:

The opportunity to achieve an attractive return;

A high degree of predictability, though not guaranteed;

Being part of the rise of RMB Internationalisation while diversify your currency exposure;

Your money in experienced hands of the largest player in China’s onshore bond market.

28

China Opportunity RQFII Bond Fund – Key Risks

Key Risks

B

E

C

D

AInterest Risk

Credit Risk

Market Risk

PRC Currency and Tax Risk

RQFII Regime Risk

For more risk disclosures, please refer to the relevant Prospectus

and Key Investor Information Document (KIID).

29

China Opportunity RQFII Bond Fund – Currency Option

Different currency share classes are available

Euro (Unhedged) Euro (Hedged) CNH

China’s Onshore Bond Market

30

China Opportunity RQFII Bond Fund – Profile

Fund Profile

Fund Domicile Luxembourg

Legal Form Sub-fund of ICBC(Europe) UCITS SICAV

Initial Offer Period 17 November 2014 to 16 December 2014

Initiator and Global Distributor ICBC (Europe) S.A.

Investment Manager ICBC (Asia) Investment Management Company Limited

Investment Objectives

Achieve capital appreciation and income generation by investing primarily in

onshore RMB (CNY) fixed income securities issued by issuers based in the

People’s Republic of China (the ―PRC‖) with a tenure of 0 to 5 years.

Initial Fund Size EUR 25,000,000

Currency of Share Class

EURO(Unhedged)

EURO (Hedged)

CNH

Risk and reward profile:1 2 3 4 5 6 7

Lower risk Higher risk

Typically lower rewards Typically higher rewards

31

China Opportunity RQFII Bond Fund – Profile (Continued)

Fund Profile

Liquidity Daily

Minimum SubscriptionFor Institutional investor: EUR 1,000,000 / CNH 10,000,000

For Non-institutional investor: EUR 5,000 / CNH 50,000

Minimum Additional SubscriptionFor Institutional investor: EUR 100,000 / CNH 1,000,000

For Non-institutional investor: EUR 1,000 / CNH 10,000

Subscription Charge Up to 1%

Management Fee 0.5% p.a.

Redemption Fee0.5% if the shareholding period is less than 1 year;

No redemption fee applies if the shareholding period is longer than 1 year

Subscription TaxFor Institutional investor: 0.01%

For Non-institutional investor: 0.05%

Distribution Policy Accumulation shares only (no dividend will be declared)

Registration Countries Luxembourg, France, Belgium, the Netherlands, Italy, Spain

32


Share Class Marketed in Belgium

Class I

(for Institutional Investors)

Class I unhedged EUR (ISIN: LU1130473561)

Class I hedged EUR (ISIN: LU1130473488)

Class I CNH (ISIN: LU1130473645)

Class N

(for Non-Institutional Investors)

Class N unhedged EUR (ISIN: LU1130473991)

Class N hedged EUR (ISIN: LU1130473728)

Class N CNH (ISIN: LU1130474023)

33


Non-recurring costs to be paid by investors in Belgium

The type of fee

Calculation

(in the currency of the share class as a percentage of the

amount invested)

Subscription Charge

For Class I, 0.5% of the Subscription Amount

For Class N, 0.7% of the Subscription Amount

Redemption Fee

0.5% of the Redemption Amount if the shareholding period is

less than 1 year

No redemption fee if the shareholding period is longer than 1

year

34


Tax regime for investors in Belgium*

Individual Investor Resident

Capital gains Withholding tax 25% on the capital gains at redemption.

Corporate Investor Resident

capital gains

Only common corporate income tax, income tax at 33.99%,

but Belgian Pensions Funds and Belgian SICAV are not

subject to this tax.

Tax on Stock Exchange Transactions for Residents

1.32% (with the cap of EUR 2000) on the net asset value of the share at redemption

without any deduction of the lump sum charges but reduced by the withholding tax

withheld. Certain institutional investors may be exempted from this tax.

Non Residents

No tax on capital gains, income and stock exchange transactions for Belgium.

*The applicable tax regime is subject to changes under applicable law.

35

China Opportunity RQFII Bond Fund – Key Documentation

For more information about this sub-fund of the SICAV, please carefully read the following

important documents:

The most recent version of the Prospectus of the SICAV including any Supplement

to it (available in English ONLY);

The Articles of Incorporation of the SICAV (available in English ONLY);

The latest semi-annual, if any, or annual report of the SICAV, if any(available in

English ONLY); and

The latest versions of the Key Investor Information Document (s) (available in

English, French and Dutch).

Copies of these documents may be obtained free of charge during usual business hours

on any full bank business day in Luxembourg at the registered office of the SICAV or on any

bank business day in Belgium at the registered office of ICBC (Europe) S.A. Brussels

Branch or on the following internet site www.fundsquare.net for download, provided you

consent to be provided with these documents in electronic format through the internet.

36

China Opportunity RQFII Bond Fund – Key Notice

Before investing in the SICAV, each time please first read the latest version of the Key

Investor Information Document (s).

You will be obliged to attach to the Trade Instruction-Subscription Form the latest version of

the Key Investor Information Document (s) or insert the date of such document on the Trade

Instruction-Subscription Form. Otherwise, your subscription may be delayed if you abstain

from doing so.

37

Contents





38

ICBC – Your First Choice Investment Partner in China

Dominant

Market Position PrudenceSize & ScaleExpertise in

China

ICBC is not only one

of the "big 4 "banks in

China and one of the

largest banks in the

world, we also obtain

the first RMB clearing

mandate outside of

Greater China. ICBC

is also actively

involved in many

recent financial deals

around the globe.

ICBC unrivalled

buisness size and scale

have allowed us to

achieve high efficiency

and enable operational

effectiveness, which

our business partners

can leverage from.

ICBC can leverage

our core competence

and in-depth

knowledge of the

Chinese market to

add value to you,

which is second to

none!

ICBC is renowned

for its prudence and

high standard of

compliance while

well-balanced with its

commercial

decisions, which

many of our business

partners deem as our

competitive edge.

Prudent &

PragmaticUnrivalled

Size & Scale

39

ICBC – Largest Asset Manager in China’s Banking Sector

11852.12

From 2006 to 2013, Volume of wealth management

product issued increased from 117 Billion RMB

to 4.75 Trillion RMB, an annual CAGR of 69%

From 2006 to 2013, Balance of wealth management

product issued increased from 80 Billion RMB

to 1.12 Trillion RMB, an annual CAGR of 46%

By the end of 2013, ICBCAM’s AUM has reached 1.12

Trillion RMB, ranks #1 among the “Big Four” state-owned

banks in China.

0.12 0.25

2.162.51

3.46

4.64

3.98

4.75

0.00

1.00

2.00

3.00

4.00

5.00

6.00

2006 2007 2008 2009 2010 2011 2012 2013

Trillion RMB

0.08 0.16 0.20

0.45

0.61

0.77

1.00 1.12

0.00

0.20

0.40

0.60

0.80

1.00

1.20

2006 2007 2008 2009 2010 2011 2012 2013

Trillion RMB

Asset allocation of underlying assets

ICBC, 29.92%

CCB, 27.03%

BOC, 22.99%ABC, 20.06%

Source: ICBC

40

ICBC – Proprietary Credit Rating System

Credit Rating System

ICBC Corporate Client Database

Access to the largest

and most complete

credit database in

China, ICBC Industrial

and Commercial Client

Database, which is

made up of data and

research provided by

loan officers.

Leverage ICBC’s strong

expertise on credit

analysis and corporate

finance in selecting

bond issuers.

41

ICBC – Rigorous Risk Management

30369.21 9977.84

1. Credit Risk 2. Legal Risk

3. Operational Risk 4. Compliance

5. Liquidity Risk 6. Market Risk

Risk

Management

• Internal rating models

• Strict Credit Review

• Counterparty risk management

• PPM system

• Internal rating models

• Strict Credit Review

• Counterparty risk management

• PPM system

• Duration Matching

• Cash Flow Matching

• Liquidity Planning

• Liquidity Monitoring via PPM

• Dedicated research team to forecast risk

• Real time monitor of Duration, Volatility

and other risk parameters

• Market Stress Testing for Black Swan

events

• Highly automated PPM system,

minimizing human error

• Internal cooperation with compliance team

• External communication with regulators

42

ICBC – Asset Management Team of ICBC Limited

11852.12

Total AUM：RMB 1.12 Trillion (EUR 140 Billion)

Total no. of staff：160

Average no. of years in ICBC : 5 years

Education level：>70％ with Master Degree or above

Marketing-5Risk

Management-34Investment-81Research-25

Asset Management Department

Investment Committee-10

Global Asset Mgt

Platform (HK)

Investment

Management

Products &

Marketing

Account &

Operation

Compliance

HR & Admin

Trading-6

ICBCAIM1

1ICBCAIM: ICBC(Asia) Investment

Management Company Limited

43

ICBCAIM – Global Investment Platform of ICBC Group

Shareholding Structure

ICBCAIM is designated as the sole gateway for ICBC

Group’s global asset management activities outside

the PRC.

ICBCAIM is a wholly-owned subsidiary of ICBC (Asia)

in Hong Kong.

Assets under management is USD 600 million.There

are a total of 6 authorized public funds, 4 Qualified

Domestic Institutional Investor (QDII) co-managed

products,5 private funds, including QFII and RQFII

fund.

ICBCAIM3

ICBC(Asia)2

ICBC1

100%

100%

Introduction

Strategic Positioning

License and Quota

Investment adviser and Manager licensed under Hong

Kong Securities and Futures Commission for types 4

(advising on securities), 5 (advising on futures

contracts) and 9 (asset management) regulated

activities.

QFII and RQFII licenses approved by CSRC,100 Million

USD QFII quota and 2.3 Billion RMB RQFII quota.2ICBC(Asia): ICBC(Asia) Limited, Hong Kong

3ICBCAIM: ICBC(Asia) Investment Management Company Limited, Hong Kong

1ICBC: Industrial and Commercial Bank of China Limited, Beijing, P.R.C.

44

ICBCAIM – History of Development

2009

Aug

2009

Aug

Authorized by the Hong Kong Regulator, HKSFC, ICBCAIM launched ICBC (Asia) Investment Fund,

an umbrella fund that offered 5 separate sub-funds – Asia Selection Growth Fund, China & Hong

Kong Vision Fund, Global Total Return Bond Fund, Asia Infrastructure and Redevelopment Fund

and Global Emerging Enterprises Fund.

Launching of the 6th sub-fund, Global RMB Fixed Income Fund, the third authorized fund in Hong

Kong that focusing on the CNH bond investment

Launching of RMB credit fund (private fund)

Signed investment agreement with an African central bank, mandated to manage its RMB investment

portfolio, benchmarking the initiation of cooperation with sovereign wealth funds and close relationship

with African country.

Qualified under the PRC regulator, China Securities Regulatory Commission (CSRC), as Qualified

Foreign Institutional Investor (―QFII‖)

Granted USD100 million QFII quota by the State Administration of Foreign Exchange (SAFE), and

qualified as Renminbi Qualified Foreign Institutional Investor (―RQFII‖)

Granted RMB 800 million RQFII quota by the SAFE

Granted an additional RMB 1.5 billion RQFII quota by the SAFE

Jan 2011

Nov 2011

Jul 2012

Mar 2013

Jun 2013

Jul 2013

Aug 2009

Mar 2014

45

ICBCAIM – Track Record of Existing Products in Hong Kong (1)

Fund Size: RMB 838 million

Inception Date: 30 December 2013

Domiciliation: Hong Kong

Average Rating: Not less than AA+

by local rating agencies

Primary Currency: CNH

Target Clients: Institutional Client

Investment Mandate: China’s onshore

bond market

RQFII Segregated Investment Account1

Investment Objective:

Invest via ICBCAIM’s RQFII quota with the aim to achieve long-term capital and

interest income returns, by investing in fixed income securities in China, including

but not limited to, China inter-bank and exchange-traded bonds, certificate of

deposits, cash and bank deposits.

Source: ICBCAIM

1This is a separate investment procuct domiciled in Hong Kong, nothing to do with the ICBC(Europe) UCITS SICAV.

46


RQFII Segregated Investment Account

0.41%

96.57%

3.02%

Cash

Credit Bonds

Money Market fund

0.41%

46.71%

49.86%

3.02%

Cash

AAA

AA+

Money Market fund

Asset Allocation Rating Allocation

RQFII Segregated Investment Account

Yield to Maturity 4.68%

Modified Duration 0.69

Since Inception Return 4.77%

Estimated Annualized Return 7.24%

As of 29 August 2014

Source: ICBCAIM

47


Fund Size: USD 23 million


Inception Date: 1 November 2013

Primary Currency: USD

Target Clients: Institutional Investors

Investment Objective:

Invest via ICBCAIM’s QFII quota with the aim to achieve long-term capital and

interest income returns, by investing in a mixture of fixed income securities and

equities, including but not limited to, China inter-bank and exchange-traded bond

markets, China A-Shares, IPOs, security investment funds, cash and bank deposits.

QFII - China Prosperous Opportunity Fund1

Source: ICBCAIM

1This is a separate investment procuct domiciled in Hong Kong, nothing to do with the ICBC(Europe) UCITS SICAV.

48


The Fund will allocate its investment in proportion as listed below. In the first 6 months

the bond and cash allocation can be higher than 50%.

The Fund will timely adjust the asset allocation ratio based on market condition and

economic development.

QFII - China Prosperous Opportunity Fund

Investment Instruments Asset Allocation Proportion

Bonds (including both inter-bank and exchange bond markets)

0-50%

Equity and Equity Investment Funds 50-100%

Cash and Banks Deposits 0-20%

Warrants、Equity Index Futures and other

related investment instruments In compliance with regulation

Source: ICBCAIM

49


QFII - China Prosperous Opportunity Fund

China Prosperous Opportunity Fund

Yield to Maturity 5.17%

Modified Duration 1.74

Since Inception Return 3.13% (in USD) 4.04% (in CNY)

Average Rating AA+


Asset Allocation Rating Allocation

0.64%

95.83%

3.53%

Cash

Credit Bonds

0.64%

28.67%

52.88%

14.28%

3.53%

Cash

AAA

AA+

AA

Source: ICBCAIM

50


Investment Objective: To achieve consistent and competitive investment returns, comprising steady income

and capital growth by investing in a mixture of international fixed income securities and related instruments

ICBC Global Total Return

Bond FundCitigroup WorldBIG Index

Yield to Maturity 5.17% 2.15%

Modified Duration 3.14 5.33

2009 Return

(From 31 Aug 2009 to 31 Dec 2009)1.85% 0.97%

2010 Return 11.35% 4.28%

2011 Return 3.61% 5.51%

2012 Return 11.43% 5.62%

2013 Return -2.04% -0.05%

Since Inception Return 32.79% 24.02%

Fund Size: HKD100 million


Target Clients: Retail Investors

Inception Date: 31 August 2009


Source: ICBCAIM

51


(As of 29 Aug 2014)

%38%

26%

35%

1%

Rating Allocation

Investment Grade High Yield Non-rated Cash

93%

6% 1%

Security Allocation

Fixed Rate Debt Sub-Debt Cash

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

20

09-9

-12009-1

1-1

20

10-1

-12

01

0-3

-12

01

0-5

-12

01

0-7

-12

01

0-9

-12010-1

1-1

20

11-1

-12

01

1-3

-12

01

1-5

-12

01

1-7

-12

01

1-9

-12011-1

1-1

20

12-1

-12

01

2-3

-12

01

2-5

-12

01

2-7

-12

01

2-9

-12012-1

1-1

20

13-1

-12

01

3-3

-12

01

3-5

-12

01

3-7

-12

01

3-9

-12013-1

1-1

20

14-1

-12

01

4-3

-12

01

4-5

-12

01

4-7

-1

Return Since Inception (%)

58%

11%

7%

5%4%

4% 10%1%

Country Allocation

China India

Hong Kong Russia

Brazil South Korea

Others Cash

33%

12%

12%

10%

9%

7%

6%4% 4%2% 1%

Sector Allocation

Financial TechnologyProperties IndustrialCommunications DiversifiedConsumer, Cyclical Consumer, Non-cyclicalBasic Materials UtilitiesCash

Portfolio Profile

Source: ICBCAIM

52


ICBC Global RMB

Fixed Income Fund

Citigroup Dim Sum (Offshore CNY)

Bond Index Investment-grade

Yield to Maturity 5.67% 3.36%

Modified Duration 1.56 2.81

2011 Return

(From 31 Jan 2011 to 30 Dec 2011)-3.44% -0.63%

2012 Return 5.58% 2.16%

2013 Return 4.83% 2.42%

Since Inception Return 9.87% 6.49%

CNH Appreciation Since Inception 7.11% 7.11%

Total Return Since Inception 16.98% 13.60%

As of 29 Aug 2014

Fund Size: CNH 67 million


Target Clients: Retail Investors

Inception Date: 31 January 2011

Investment Objective: Achieve consistent and competitive investment returns, comprising steady income

and capital growth in RMB terms through investing in RMB denominated Debt Securities which are issued or

distributed outside mainland China.

Source: ICBCAIM

53


(As of 29 Aug 2014)

Portfolio Profile

%

91%

6% 3%

Security Allocation

Fixed Rate Debt Sub-Debt Cash

14%

26%57%

3%

Rating Allocation

Investment Grade High Yield

Non-rated Cash

24%

24%

15%

14%

9%6%

5% 3%

Sector Allocation

Financial Property

Communications Consumer, Cyclical

Diversified Utilities

Consumer, Non-cyclical Cash

73%

16%

8% 3%

Country Allocation

China Russia HONG KONG Cash

-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

10.00

12.00

Ja

n-1

1

Ma

y-1

1

Au

g-1

1

Nov-1

1

Feb

-12

Ma

y-1

2

Au

g-1

2

Nov-1

2

Feb

-13

Ma

y-1

3

Au

g-1

3

Nov-1

3

Feb

-14

Ma

y-1

4

Au

g-1

4

Total Return and Return Since Inception (%)

Return Since Inception

Total Return (including RMB appreciation)

Source: ICBCAIM

54

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Paris Branch

Madrid Branch

Brussels Branch

Amsterdam Branch

Barcelona Branch

Warsaw Branch

Milan Branch

ICBC (Europe)S.A.Best Bank in Luxembourg

Headquarters in Luxembourg

55

ICBC (Europe) S.A. Investment Fund Platform

ICBC (Europe) S.A. – Asset Management Strategy

Global Investment Fund Center

56

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ICBC (Europe) UCITS SICAV China Opportunity RQFII Bond Fundv.icbc.com.cn/userfiles/Resources/ICBC/haiwai/Brussels/... · 2015-04-20 · ICBC (Europe) UCITS SICAV – China Opportunity

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