China's First Sino-foreign Fund Management JV in the Pipeline

Home>>Business

Last updated at: (Beijing Time) Monday, January 13, 2003

China's First Sino-foreign Fund Management JV in the Pipeline

China's first Sino-foreign fund management joint venture is expected to introduce a new fund product in the first half of this year after getting approval from China's regulatory body.

DISCUSSION

CHINESE

SEND TO FRIEND

China's first Sino-foreign fund management joint venture is expected to introduce a new fund product in the first half of this year after getting approval from China's regulatory body.

"We decided to launch our first fund product, the China Merchants Antai equity investment fund, after careful market study and research. It's an umbrella fund which is popular in the world equity markets but new to domestic investors," said Cheng Baoliang, general manager of China Merchants Fund Management Co, at a press conference yesterday.

"We have applied to the China Securities Regulatory Commission (CSRC) regarding the fund. While waiting for approval, we are preparing to issue the fund," Cheng said.

Umbrella funds are collective investments that are divided into a number of sub-funds or share classes, each investing in different assets and markets. Investors can change their investment strategy by shifting money among the different sub-funds, sometimes at minimal cost.

According to Cheng, China's expected first umbrella fund is designed to include four sub-funds: a money market fund, a bond fund, a balance fund and an equity fund. They range from low to high investment risks.

"All feedback we've got from the market so far has shown that our product can satisfy the needs of different investment groups and has good market potential," Cheng said.

The fund targets both institutional and individual investors who will be entitled to change their investments from one to another sub-fund free of charge three times a year, said Niu Guanxing, board director of the joint venture.

China Merchant, the country's first Sino-foreign fund management venture, was established in Shenzhen in late December. Dutch financial giant ING Group NV holds a 30 per cent stake while China Merchants Securities holds 40 per cent. Another three Chinese partners took the remaining stake, each holding 10 per cent.

The CSRC gave the green light to a total of four fund-management joint ventures last year, including the China Merchants Fund, as part of China's World Trade Organization membership commitments.

Christopher Ryan, regional director for North Asia at ING Investment Management and a deputy board director of China Merchants Fund, said ING will consider taking more shares in the joint venture because it has a strong interest in Chinese market potential, but at the current stage it will concentrate its efforts to ensure the joint venture's initial success.

The foreign party of a fund management joint venture can control at most a 33 per cent stake, but the figure is expected to rise to 49 per cent by 2006.

Although the joint venture's management is confident the new fund will be a success, some analysts said it could be difficult to get the nod from the CSRC.

"The market and the body of regulations are not prepared for the issue of an umbrella fund, and it's unfair to get permission to issue several funds with a one-time application," said an analyst who declined to be named.

Questions?Comments? Click here

Tibet Reports Double-digit Economic Growth Rate ( 2 Messages)

Why Doesn't US Set to 'Use Force' Against DPRK? ( 62 Messages)

New-Generation Nuclear Reactor Put into Use in China ( 7 Messages)

Jiang, Bush Talk over Phone on DPRK Nuclear Issue ( 4 Messages)

To Occupy China's Diaoyu Islands, Japan's Fond Dream for Long ( 18 Messages)