Monday, July 17, 2006

Biggest Foreign Fund Manager In China
Good To Know

When we talk of size, we talk of the Fidelitys and Vanguards... but for the emerging economic giant like China, the fund management industry is still very fluid, with players jockeying for positions all the time. Foreign fund management houses have to navigate the rules and regulatory requirements and evolvement to put in place the best strategies. The number one foreign jv in terms of funds under management is China International ( a jv with JP Morgan holding a 49% stake) with nearly Rmb 12 billion. Followed by Invesco Great Wall with Rmb 11.5 billion. Previous year's top dog, Fortis Haitong saw its assets drop by a surprising 32% to Rmb 3.8 billion (back in 2004 funds under management hit a peak of Rmb 13 billion for Fortis Haitong). China Merchants (a jv with ING) also saw lots of money flowing out of their funds management unit.

One of the biggest beneficiaries of the recent asset reallocation is Guangzhou based E-Fund, an equity focused manager that has become China's second biggest fund house with Rmb 44 billion under management.

There are aproximately 20 Sino-foreign jvs in funds management, and they account for roughly 30% of China's mutual fund industry. The other bigwigs such as Fidelity, Vanguard, T. Rowe Price, etc... are not in China yet as they probably see no need to tap the China retail side for funds to manage. They are also not keen to be in a jv which would not have them in control just to be in China. Hence most of them are managing their China funds out of HK. When the fund management industry liberalises further (i.e. allowing 100% or even just 51% control), we might see more M&A activity with respect to local and Sino-foreign fund management units.

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