Foreign-fund managers have quickly moved into the fledgling Chinese stock market in the hope of benefiting from the rising market activity as China gears up for entry into the World Trade Organization (WTO).
JPMorgan Fleming Asset Management has surpassed its peers, having worked closely with Shanghai-based Hua An Fund Management Co in the last two years.
The two companies established a working committee in Shanghai on Wednesday to pave the way for a joint venture fund management firm.
It is a sign of the further development of the co-operation between the two companies after a memorandum of understanding was signed in July and a technical co-operation agreement signed in August 2000.
"JPMorgan Fleming would like to become one of the first JV fund management companies in China," said William Harrison, president and chief executive officer of J.P. Morgan Chase, which owns JPMorgan Fleming. "Given the opportunity, we'd love to invest as much in the JV as we can."
Foreign-fund managers are now kept away from China's fund management industry. But following China's upcoming WTO entry, foreign securities houses will be allowed to take a 33 per cent stake in a domestic securities house. The proportion will up to 49 per cent in three years.
Many foreign securities firms have been investing in China by means of technical support and consultancy.
As Hua An's foreign co-operation partner, JPMorgan Fleming provided all-round technical support that ensured the successful launch of China's first open-ended fund in September.
Shenzhen-based China Southern Fund Management also sealed a co-operative agreement with the Hong Kong asset management unit of global banking giant Hongkong and Shanghai Banking Corporation (HSBC) to share information and experience on fund management before it launches China's second open-ended fund.
Other firms rumoured to be involved in negotiations to form JV securities firms include Fortis with Haitong; Lynnais with Xiangcai; Fullgoal with Bank of Montreal; and Deutsche with Da Cheng.
Insiders said such a co-operation creates a win-win situation.
"China's fund management industry is still in its infancy and will have to deal with many new issues and challenges," said Han Fanghe, general manager of Hua An. "And with China's imminent entry into the WTO, the introduction of foreign expertise and management style will greatly assist us in facing the WTO challenge."
He hopes such co-operation will contribute more to the development of China's fund management industry, re-establishing Shanghai as a leading international financial centre.
Their efforts also received positive feedback from the China Securities Regulatory Commission (CSRC), the watchdog of China's securities industry.
(China Daily November 2, 2001)
