Research Of Investment In Overseas Additional Tier 1 Capital Securities:From Point Of View Of Onshore Investors

The great drawdown of A Shares Market in mid-2015 forced the domestic investors to put more focus on fix income assets.At the same time,the increased volatility caused by the foreign exchange reform in Chinese FX market left the domestic investors no choice but to look for overseas assets denominated in stable currencies such as USD and EUR.Under this situation,great focus has been given to overseas fix income and structured fix income market.The reality that lacking of investment experiences and research support hindered the domestic investors to get any closer to the overseas fix income market.As a sub-set of overseas fix income market,the overseas additional tier 1 capital asset market has been left cold as well.With a developed secondary market,additional tier 1 capital securities have been used by foreign financial institution for funding purpose for years.Although with a late start,the total amount of additional tier 1 capital securities issued by Chinese financial institutions has grown over 10 billion USD in size.It is very good timing to research on how AT1 capital securities investment will benefit domestic investors' portfolio and how to control the risks associated.Both for academic and for practical purposes.This article starts with very basic concepts and theories.An introduction on clear definition and investment properties of AT1 capital securities will be given.Then related literature will be teased after.In order to allow the investors to have clear whole picture on the market,the overseas fix income market will be briefed before the introduction of AT1 capital securities market.And the development and status of AT1 capital securities in foreign investors' portfolio will be set forth thereafter,prior to the current problems in AT1 capital securities investment of domestic investors as pointed out hereunder.This article will go deep in two dimensions both in return and risk.Using both qualitative and quantitative methods to analyze the risk-adjusted return and risk-identification-management process.Last but not the least,a conclusion will be given together with practical advises on both investment implementation and policy optimization.