China to Allow Mutual Fund Sale - Analyst Blog
27 Giugno 2013 - 5:00PM
Zacks
In the further opening up of its financial markets, China’s
securities regulator – China Securities Regulatory Commission
(CSRC) – sanctioned the introduction of domestic mutual funds
within China by global banks. The 7 global banks comprise
HSBC Holdings plc (HBC), The Bank of East
Asia, Limited (BKEAY), DBS Bank, United Overseas Bank,
Hang Seng Bank Limited (HSNGY), Nanyang Commercial
Bank and Citigroup Inc. (C).
The move is expected to aid the companies widen their scope of
financial services within the Chinese local market. These banks
will get the opportunity to sell fund products to corporate, retail
and institutional clients, which are designed by local fund
managers. Prior to this, foreign banks were allowed to sell only
Qualified Domestic Institutional Investor (QDII) funds to its
Chinese clients that restricted access of the foreign banks to
China’s domestic retail investment market.
At the onset, HSBC would sell local fund products that are managed
by its local joint venture, HSBC Jintrust Fund Management Co.
Notably, it plans to partner other fund houses by this year end. On
the other hand, Citigroup intends to sell the mutual funds to the
public with the help of seven other mutual fund companies that
include China Asset Management Co.
Other foreign banks that have applied for a license to sell local
mutual funds in China include Oversea-Chinese Banking Co and
Standard Chartered PLC (SCBFF).
In the past two years, CSRC have undertaken several measures to
enhance the participation of institutional investors in the
country’s stock market and promote more foreign investment. As per
the new mutual fund rule, domestic futures companies and insurance
companies have been granted permission to sell mutual funds in
China.
Additionally, the Shanghai Stock market has directed companies to
return 30% of its profits to shareholders in the form of dividends.
Moreover, the restrictions on foreign investors applying for
Qualified Foreign Institutional Investor (QFII) licenses have been
lowered by increasing the national quota for QFII investments to
$80 billion from $30 billion in Apr 2012. This is further expected
to increase by 10 times the present quota going forward.
The opening of Chinese financial markets to foreign lenders is
expected to increase oversees banks’ market share in the country’s
financial markets. Moreover, it will provide a strong foothold to
the companies in China’s rapidly growing mutual fund market.
BANK E ASIA-ADR (BKEAY): Get Free Report
CITIGROUP INC (C): Free Stock Analysis Report
HSBC HOLDINGS (HBC): Free Stock Analysis Report
HANG SENG BK (HSNGY): Get Free Report
STANDARD CHARTR (SCBFF): Get Free Report
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