As headhunters search to replace Doug McTaggart, CEO of Queensland Investment Corporation (QIC), and Hazel McNeilage, head of asset management, the funds manager continues to make moves northward into China. Dr Geoff Raby, the former Australian Ambassador to China who was hired by QIC in September, says he will aim to use his contacts in politics and business to build relationships in China to assist the big funds manager on its hunt for investment mandates. The Queensland-based manager has in recent years sought to broaden its $61 billion in funds under management from the Queensland Treasury and $27 billion from QSuper after the latter took control of its investment strategy. Raby says that QIC will be aiming to garner Chinese clients seeking exposure to offshore investment strategies. In its latest five-year plan the Chinese Government committed to building a social safety net for its citizens, which could include such things as pensions and retirement savings plans.
“There is a great deal of activity around the life insurance scene in China, with the introduction of things like rural pensions, and that would seem to open up a lot of opportunities,” Raby says. China’s appetite for acquiring natural resources has made headlines. But Raby says China, spurred by a policy to invest part of its vast foreign reserves offshore, is an active portfolio investor across a range of industries. “There is a great diversity of asset holdings now and I think there will be a very strong desire to move away, in an orderly way, from such an overriding preponderance of holding U.S. Treasuries. “I think you will see more sophistication and a better understanding of balanced portfolios and spreading risk,” Raby says. While so-called China bears have been vocal in recent months, Raby says he continues to be bullish about the growth of the Chinese economy and predicts it will grow four times larger in 20 years.
“The next big phase of China’s development will be the liberalisation of the capital account,” he says. “This will involve such things as gradually increasing the internationalisation of the renminbi.” He says financial services companies that operate in China as controls on its capital account are freed will find business opportunities. Raby will remain based in Beijing, where he was Australian ambassador for five years. As QIC courts Asian investors, Indonesia’s largest indigenous funds manager, Mandiri Investasi, has begun marketing its strategies to Australian institutional investors. Like QIC, it aims to broaden its primarily domestic client base by attracting offshore clients into its Indonesian equity and debt funds. The Indonesian economy benefits from a large and youthful workforce.