QFII redemptions rise as crisis spreads

Concern over the health of financial markets has led to "a lot of redemptions" from qualified foreign institutional investor (QFII) bond funds, despite their strong performance versus other China-Hong Kong investment schemes, according to Andrew Fung, general manager and head of investment and insurance at Hang Seng Bank in Hong Kong.

Fung did not quantify the level of redemptions from these China-exposure funds but told delegates attending the Asia Risk 2008 conference in Hong Kong that bond funds are still offering a yield of about 5%. He added that, given the outlook for a stable and possibly appreciating renminbi against the Hong Kong dollar, bond funds should continue to perform well. Hang Seng Bank, a subsidiary of HSBC, launched bond fund investments in May this year.

Hang Seng Bank and others created bond funds using