BlackRock Gets Go-Ahead for a Mutual-Fund Business in China
29 August 2020 - 6:20PM
Dow Jones News
By Dawn Lim and Stella Yifan Xie
BlackRock Inc. got approval from regulators to start a
mutual-fund business in China, a milestone for an investment firm
with fierce ambitions in the world's second-largest economy.
The New York asset manager was given the green light to set up a
wholly-owned mutual-fund business in Shanghai, the China Securities
Regulatory Commission disclosed late this week. This paves the way
for the world's largest asset manager to be one of the first--if
not the first--foreign investment firms to start managing money for
Chinese individuals.
The move comes as senior U.S. and Chinese officials this week
said they were committed to carrying out the phase-one trade accord
between the two nations. The deal, signed in January, included
terms that granted financial institutions more access to China.
"BlackRock has received regulatory approval to advance our
establishment of a fund management company in China," a spokeswoman
said, "through which we will provide Chinese investors with
differentiated solutions to help them achieve their long-term
financial goals."
BlackRock, which manages some $7.3 trillion, has had a presence
in China for more than a decade. It was among the first foreign
asset managers to set up wholly foreign-owned operations in
Shanghai in 2017. The company began selling private funds to
high-net-worth investors based in mainland China the following
year. It manages three onshore private funds.
But, like other foreign firms, it was barred from independently
accessing China's vast market of mom and pop investors and couldn't
break into the country's mutual-fund industry without forming
partnership with local firms until authorities loosened rules on
foreign ownership of investment businesses.
This year, Chinese regulators allowed foreign asset managers to
apply for mutual-fund licenses by scrapping foreign ownership
limits on mutual-funds companies. Neuberger Berman and Fidelity
International also applied.
Even as trade tensions between China and the U.S. have risen in
recent years, BlackRock Chief Executive Larry Fink and the firm's
top executives earmarked China as a priority. The firm held talks
with different potential Chinese partners in an attempt to expand
further in China. The China Banking and Insurance Regulatory
Commission recently cleared the way for BlackRock to work toward a
joint venture with China Construction Bank Corp. and Singapore's
Temasek Holdings.
"I continue to firmly believe China will be one of the biggest
opportunities for BlackRock over the long term, both for asset
managers and investors, despite the uncertainty and decoupling of
global systems we're seeing today," Mr. Fink said in a letter to
the firm's shareholders earlier this year.
Traditional asset managers in China are projected to manage
about 90 trillion yuan (about $13 trillion) in assets by 2023,
according to consulting firm Oliver Wyman. As of July 2020, there
were more than 140 Chinese mutual-fund managers, overseeing more
than 17 trillion yuan in assets, according to the Asset Management
Association of China.
Peter Alexander, managing director of Shanghai-based consulting
firm Z-Ben Advisors, said the latest approval BlackRock received
for a mutual-fund business was "a key initial step."
"The next challenge will be whether they are going to be
adaptive enough to compete locally," he added.
Write to Dawn Lim at dawn.lim@wsj.com and Stella Yifan Xie at
stella.xie@wsj.com
(END) Dow Jones Newswires
August 29, 2020 04:05 ET (08:05 GMT)
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