Russia’s RB Capital is reportedly set to set up a joint venture investment firm in China, lured by Chinese stocks

The file photo shows a worker counting Chinese renminbi banknotes at a bank in Tancheng County, Linyi City, east China’s Shandong Province. Photo: Xinhua

A Russian trust company will reportedly set up an open-ended equity fund to invest in Chinese stocks, the latest example of foreign investors’ rush to hold more Chinese financial assets, lured by their stable returns.

According to sputniknews.com, RB Capital, a Russian trust company, has started to launch an open-ended equity fund called RB Capital Chinese Assets.

The fund is expected to invest in shares of Chinese companies listed on the Hong Kong and St. Petersburg stock markets and in yuan-denominated bonds listed on the Moscow Stock Exchange. It will be the first mutual fund to specialize in investing in bonds issued by Chinese companies traded on the Moscow Stock Exchange, the report said.

Shares of almost 60 Hong Kong-listed companies can be traded on the Russian stock exchange, including Alibaba, Xiaomi and China National Petroleum Corp.

The decision by Russian investors who have not previously been active in foreign investment in emerging markets reflects the attractiveness of Chinese financial assets to global investors as well as Russia’s postponement of foreign investment under the influence of sweeping Western sanctions, experts say.

“Against the backdrop of increasing global financial market volatility, the resilience of China’s capital markets is attracting more foreign investors. This combination makes the Chinese stock market increasingly attractive to Russian investors, especially Russian trusts, which often invest funds in global financial assets,” said Chen Jia, an independent researcher on international strategy, told the Global Times on Sunday.

According to Chen, this is the best option for Russian investors if they want to ensure the global allocation of their financial assets by participating in China’s dual-cycle economic growth pattern and capital market connectivity.

“In the long run, Russia should increase its investment in China if it wants to participate fully in China’s development dividend,” he noted.

It’s not just Russian investors who are trying to hold more Chinese financial assets. Credit Suisse recently announced that it has reached an agreement to buy out its local partner in a Chinese securities joint venture, making the joint venture the third fully foreign-owned joint venture after JP Morgan Securities (China) Co and Goldman Sachs Gao Hua Securities company in China is Securities Co.

Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times that China’s bond wealth is the most stable, helped by China’s economic resilience.

British asset manager Abrdn Plc may buy Chinese bonds again on rising yields after selling off three months ago, according to a Bloomberg report.

The report noted that China’s government bonds have been on track to fall 8.5 percent this year, according to a Bloomberg index, but that’s less than the 15 percent level for US Treasuries.

Because of these advantages, as well as China’s continuous opening-up efforts, the trend of foreign capital flowing into domestic financial markets is likely to increase, experts said.

“With China’s political stability, strong supply chain, huge consumer market and economic resilience, foreign investment in Chinese financial assets is expected to increase steadily in the coming years,” Dong said.

According to Shanghai Securities News, the China Securities Regulatory Commission is formulating special short-term trading regimes for foreign investors to facilitate their investment in the A-share market.

Chen Jia noted that China’s trade patterns have undergone tremendous changes in recent years, and ASEAN has become China’s largest trading partner, China’s investment partners may also upgrade to attract more investment capital from the new partners.

He noted that the China-Russia energy trade and digital currency partnership show a new direction for the internationalization of the yuan, and Russian capital is likely to become an important part of China’s inbound investment.