China stepped up efforts to open its financial sector to help draw in more foreign investment
According to Asset Management Association of China, as of the end of January 2022, there were 137 fund management companies in China, 45 of which were foreign-invested, accounting for over 30% of the total.
“China will continue the financial opening-up process and promote the steady development of foreign trade and investment,” said Premier Li Keqiang in the government work report delivered at the fifth session of the 13th National People's Congress.
In fact, the fund industry has made great strides as a result of openness over the past two years.
The world’s largest asset manager BlackRock (BLK:NYSE) announced the opening of its wholly-owned public fund company in China in June 2021. And in August of the same year, Fidelity Fund received the permit for operation, followed by the official approval of setting up a China subsidiary for Neuberger Berman Fund in September.
Several other asset management giants such as Schroders, AllianceBernstein and VanEck were still queuing up for public offering licenses in mainland China, as of press time.
“It has had very positive impacts,”Qi Teng, a senior fund manager with Hang Seng Qianhai Fund Management, noted. “Foreign-backed asset managers have relatively mature and advanced investment philosophy, strategies and methods, which can contribute to a better investment atmosphere with a long-term version, value investing and ESG focus, and also help improve the investor mix.”
Domestic investors' demand for overseas asset allocation is also increasing. As of December 20, 2021, 47 of the 137 public fund management companies in China received QDII (Qualified Domestic Institutional Investor) licenses issued by the China Securities Regulatory Commission, and the cumulative approved quota totaled USD70.54 billion.
Meanwhile, more and more domestic public funds start to dive into overseas markets. Over 20 fund companies have set up subsidiaries or offices in Singapore, Japan, Europe, the United States and other countries to expand their influence.
“This can also provide China-driven investment services to overseas clients and introduce long-term capital to the Chinese capital market,” He Xiaoyu, chief economist of Zhengxin Investment Group, explained.
In addition, the pace of foreign private equity investment in China has also been accelerating. As of March, there were 36 wholly foreign-owned private securities institutions, with a total of 174 private securities investment funds and nearly CNY 40 billion under management, per simuwang.com, a portal for information about domestic private equity funds.