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Published on November 22, 2007

BRIC stands for Brazil, Russia, India and China.

"UOB Asset Management's strength is in the Asian markets," said CEO Vana Bulbon. Citing data from Morgan Stanley Research, Vana said gross domestic product (GDP) growth in Asia, excluding Japan, had moved in the opposite direction to that of the United States since June 2006. As of the end of the first half of this year, the region's GDP had grown 4 per cent on average, while that of the US had dipped down to well below 2 per cent, thanks largely to the region's declining debts and growing foreign-exchange reserves.

Growth within the region has been spearheaded largely by China, with its US$1.33-trillion (Bt45 trillion) reserve, which is now flooding the world from Sudan to Luang Prabang. The Great Wall of China, once defending the old empire from barbaric invaders, could now be broken down by the flow of domestic individual investment, estimated at about $2.2 trillion.

Now that policy-makers in Beijing have introduced the Qualified Domestic Institutional Investor measure, allowing individuals to invest through approved domestic institutions, Vana believes there is much to be gained from the difference between the Chinese-listed A-shares and Hong Kong-listed H-shares. There is a large upside for H-shares. For example, data from October 1 show Luoyang Glass's Chinese shares stood at 8.44 Hong Kong dollars, whereas the Hang Seng-listed share was 87 Hong Kong cents a share - an 904-per-cent premium. The catalyst for the flow would be the central government allowing individuals to invest directly in Hong Kong.

The H-shares are so hot that, for instance, some brokerage firms have had to prebid for Alibaba stocks before they have even started trading, said Alton Lau, a director with Phillip Commodities (Hong Kong).

Unlike another BRIC, India, the Chinese central bank has been adept at cooling down the overheated market with steady interest rate rises and strict reserve-requirement ratios for local banks. Although the government has also cut export-tax rebates and imposed an export tax to curb some exports, it is careful not to erect any capital-control measures.

As economic development moves inland, urbanisation will be a major growth driver.

All of that can and is likely to be achieved by recycling the huge surplus into the domestic economy.

The UOB Smart Greater China fund will feed off of UOB AM's Singaporean-based United Greater China Fund, which has already seen a 10-year growth of 15.24 per cent in its net asset value, factoring in a 5-per-cent sales charge, since its inception in 1997.

The fund had its IPO yesterday.

To date, UOB AM Thailand has

the largest net asset value of FIFs: Bt21.7 billion.

 Ki Nan Tsui

 The Nation