Revived appetite for emerging market stocks and bonds isstarting to include China—and even its embattled currency.

China Asset Management Co. has seen more inflows into equityfunds that invest offshore yuan into mainland equitiessince Britain'sJune 23 vote to leave the European Union. CSOP AssetManagement Ltd. had its strongest inflows in 14 months in Juneto an exchange-traded fund (ETF) that pumps yuan held abroad intoChina's sovereign bonds. A net US$604 million has flowed into Chinavia the Renminbi Qualified Foreign Institutional Investorsprogram in the first seven months, versus an outflow of $4.1billion last year, Z-Ben Advisors estimates. Inflows into stockshave dominated this year at about $880 million.

“People are looking again at the emerging markets, which wereundervalued, China for example,” said Freddie Chen, Hong Kong-basedmanaging director at China Asset, which has used just overhalf of its RQFII quota of 21.8 billion yuan ($3.3 billion) andallocated 80 percent to equity with the rest in fixed income. “Wehave seen a lot more interest” after the Brexit vote highlighteddeveloped nation risks, he said.

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