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High-end customers now have a less volatile option to add to their diversified portfolios with the launch of the mainland's first domestic wine investment trusts

Mainland buyers can now invest in locally produced fine wines. The country's first domestic wine investment trusts are offering 2006 vintages from the fledgling Chateau Junding vineyard in the Nava Valley in Shandong province on the country's eastern seaboard.

The trusts, launched in July by two of China's largest banks, the Industrial and Commercial Bank of China (ICBC) and Citic Bank, are in the form of a 'Subscribing and Collecting + Investing and Financing Trust' programme, a new onshore investment channel designed for private banking and high-net-worth customers in China.

The banks aimed to raise close to 100 million yuan (HK$114.2 million) each through the trusts. According to the ICBC's financial market department, its trust, launched on July10, 2008, was more than twice oversubscribed. The Citic Bank trust, launched a day later, raised 90.5 million yuan.

ICBC's trust is a partnership with China Foods subsidiary Cofco Wines & Spirits and Zhonghai Trust, a Shanghai-based company that is majority owned by CNOOC. Cofco owns Chateau Junding, which is producing the wines for the trusts, and China Foods is the company behind China's popular Great Wall wines.

All proceeds from the trusts will be invested in the results of Chateau Junding's 2006 crop. Customers are investing in en primeur wine (buying wine as a future before it is bottled), with each barrel containing 300 bottles or 225 litres of wine. Each investor is limited to buying a maximum of two barrels of wine at a price of 100,000 yuan per barrel.

The wines are due to make their debut in three phases in October, March and June. After 18 months, investors can choose to receive their 8per cent annual interest in cash or the equivalent in cases of red wine with each bottle priced at between 500 and 700 yuan. If the wine trust fails to reach its promised 8 per cent return, investors can sell the wines back to the vineyard at an 8 per cent premium.

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