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Global Fund Launches Surge in China Amid Yuan Weakness and Economic Uncertainty

Global fund launches in China have reached unprecedented levels as a weakening yuan and a fragile economy drive domestic demand for foreign assets. This trend reflects growing investor unease within China and a shift towards seeking stability and returns in overseas markets.

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According to data from Z-Ben Advisors, eleven funds have been issued under the Qualified Domestic Limited Partner (QDLP) program so far this year, surpassing the full-year totals of any previous year. Notable fund managers, including Blackstone, Bridgewater Associates, and Oaktree Capital Management, have launched new funds, although specific fundraising amounts have not been disclosed.

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These QDLP funds, which cater to high net worth and institutional investors by investing in overseas assets, are gaining traction as Chinese markets show signs of strain. The yuan has hit six-month lows against the dollar, the stock market is exhibiting fatigue after rebounding from five-year lows in February, and benchmark 10-year government bond yields have reached record lows.

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“Investor demand for offshore products has surged this year due to a weak yuan and negative sentiment,” said Ivan Shi, head of research at Shanghai-based Z-Ben Advisors. He noted that alternative investments and foreign bonds are particularly popular among investors.

In April, Blackstone launched its first QDLP fund, directing capital towards its Private Equity Strategies fund. The initial sales target of $40 million was achieved in less than two weeks, according to sources familiar with the matter. Blackstone declined to comment on the success of this launch.

Bridgewater has also established an outbound fund this year, according to official data. Other new entrants include U.S. asset manager Principal Financial Group, which has introduced a data center fund, and firms such as Oaktree, abrdn, and UBP, which have issued global bond funds.

The QDLP program, introduced in 2012, complements other outbound investment channels in China. Although the sums involved in these funds are relatively small compared to China’s overall capital markets, and outflow is controlled by fund size caps and a closed-loop operation similar to the Stock Connect scheme, the sector is receiving strong support from Chinese authorities.

Market participants report that the regulatory environment is becoming more favorable for foreign managers. U.S. managers VanEck and Rayliant Global Advisors are currently applying for QDLP licenses.

“Securing QDLP approval as a foreign manager seems significantly easier than before,” said Jason Hsu, chief investment officer at Rayliant.

As Chinese investors continue to seek diversification and stability amid domestic economic challenges, the QDLP program is likely to see further growth and expansion in the coming months.

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