China's Securities Industry onto Road of Opening-up

Home>>Business

Last updated at: (Beijing Time) Sunday, October 20, 2002

China's Securities Industry onto Road of Opening-up

Foreign investors finally got the go-ahead into China's fund management business as the country issued its first licence for a Sino-foreign fund management joint venture earlier this week.

DISCUSSION

CHINESE

SEND TO FRIEND

According to News of Oct.17, 2002 from Shanghai, when the news that Guotaijun'an Security Company and Allianz Group were given the approval to form the Guo'an Fund Management Company, the first joint venture management firm in the country was spread out it has roused an extensive attention. Persons of the trade are of the opinion that the "quasi-birth certificate" the Fund Management Company has obtained is a signal, telling that China is going to officially honor its commitment of opening its securities market to the outside world. It has set a landmark that China's securities industry would from now on march onto the road of opening up to the outside world.

According to the commitment China made to the WTO, foreign firms are allowed, after China's entry into the WTO, to set up joint venture companies to engage in securities investment and fund management, in which the ratio of foreign capital will not exceed 33 percent and not to exceed 49 percent when China has entered the WTO for three years. However, in a joint venture company established by a foreign securities company, the proportion of foreign capital will not outstrip one third of the total. The joint venture company may have the right to undertake the sales of Share A, B and H as well as government bonds or company debentures and kicking off the establishment of a foundation without going through the middleman.

Last July 1 saw the formal implementation of the "Regulation on establishing foreign-shared stock company", and the "Regulation on establishing foreign-shared fund management company" published by China Securities Regulatory Commission. On the very day, Hunan Financial Securities and Credit Lyonnais together put forward an application to China Securities Regulatory Company for setting up a securities company with foreign shares. And that followed with a series news of several foreign companies, such as French Peregrine Investments Holdings Ltd., German Allianz, International Finance Corporation and Internationale Netherlanden Groupe, the world-renowned financial groups to put forward applications for setting up foreign-shared fund management companies.

Actually, long before China's entry into the WTO, there had been a stealthy movement and connection between Chinese and foreign financial bodies for the "setup of foreign-shared fund management companies". Last November alone, we saw Hua'an JP Morgan, GF Securities - Franklin Templeton, Haitong Securities - Fortis Investment Management and Guangda Securities - Prudential, the four "Lovers" signed letters of intent for cooperation. And last May, Franklin Templeton had its first annual Asian conference held in Shanghai, at which the world biggest fund management company expressed its clear intention to march into China's fund management market.

Guotaijun'an Securities Company and Allianz Group had the chance to get on the first train when submitting their application for the setup of a fund management company. Now, they came up to the top in a crucial battle in "getting the approval for the establishment", about which both parties felt very happy. For there used to have a restriction by the China Securities Regulatory Commission that there would be "no more than one fund management company to set up, in which one company holds most of the shares". And due to this restriction, the joint venture fund management company was once landed in a "difficult labor" but this time when the Guo'an Fund Management Company got the approval it indicated that the barrier had been broken through.

For foreign capital, to set up a joint venture fund management company proves to be an effective way by which they can enter "the briskest new market in the world" and they will be able to profit from it. Charles Johnson, Chairman and CEO of the Franklin Templeton ever expressed in Shanghai that the conditioned and step-by-step entry by foreign fund management companies and investors into China would further push forward the development of the investment fund market in China.

For the Chinese securities and fund management companies, to put hands together with the foreign capital will help them to learn more advanced experience in fund management, technical and business-operation conception so as to take an early part in the international competition.

Statistics from the departments concerned indicate that, at present, there are a total of 54 closed-up and 15 open-up funds in Shanghai and Shenzhen Stock Exchanges with the fund management scale to exceed some 120 billion-yuan in people's currency. Persons of the trade say, along with the increasing development of the joint venture fund management companies in quantity and scale the reasonable investment, the way of investment of setting store by blue-chip and the investment experience of decentralized composition will by and by come to be the mainstream in the fund market in China.

Questions?Comments? Click here

China Approves First Joint Venture Management Firm

Why US Congress Grants Bush War Authority ( 9 Messages)

Jiang Expects In-depth Discussion with US President ( 8 Messages)

China's Automaker Invests in GM-Daewoo Joint Venture ( 10 Messages)

At least 182 Dead in Indonesian Island Blast: President ( 26 Messages)

HKSAR Expected to Have World-class University in Five Years ( 11 Messages)