BlackRock has been approved to start running its own mutual fund business in China, as the world’s largest asset manager strengthens its presence in the country’s growing investment industry.
The Chinese Securities Regulatory Commission has approved the request for a fund company 100% owned by BlackRock, the US group said on Friday.
The move follows a wave of activity from major U.S. banks and asset managers seeking to integrate more fully into China’s financial system and leverage its large savings pool, historically oriented toward liquidity and real estate.
Greater foreign participation has been spurred by Chinese government reforms related to the liberalization of the financial system. These have gained momentum despite the strained geopolitical relations between the United States and China over the past year.
“China is taking important steps to open up its financial markets,” said Larry Fink, President and CEO of BlackRock. “We are honored to be able to help more Chinese investors access financial markets and build portfolios that can serve them throughout their lives.”
The green light comes weeks after BlackRock received a separate approval for a wealth management company with China Construction Bank, through which it will design investment products that will be distributed through local banks.
The approvals reflect the multiple routes available to foreign groups entering China and “position BlackRock to expand the scope of its products and services and its investment prospects to all customer segments across China,” the company said. . China’s asset management market was worth Rmb 121.6 billion ($ 19 billion) last year, according to the Boston Consulting Group and the China Everbright Bank.
As of April 2020, foreign companies are allowed to fully own mutual fund companies in China, an evolution from the previous requirement to operate through a joint venture with a local partner. JPMorgan is in the process of buying out its joint venture partner in its mutual fund business in China.
More foreign ownership is also allowed in sectors, including mainland securities firms, which are involved in underwriting debt and equity. JPMorgan last week applied to take full control of its securities joint venture, following a similar move by Goldman Sachs in December.
The country’s wealth management industry, which is dominated by a state-owned banking sector which is the world’s largest in terms of assets, has also been the subject of reforms to encourage foreign participation as China is looking to develop its savings industry.
Goldman Sachs last month announced its partnership with ICBC, one of China’s largest banks with 680 million retail clients, to launch a majority-owned wealth management business. Amundi, the French asset manager, launched a partnership with Bank of China last year.