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 looking to integrate more completely integrate into the Chinese financial system and take advantage of its vast savings pool, which has always been oriented towards money and property.
Greater foreign participation was stimulated by the Chinese government’s 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 operation 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 breadth of its products and services and investment information 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 China Everbright Bank.
Since april 2020, foreign companies were 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 buy out your partner in a joint venture in its mutual fund business in China.
More foreign ownership is also allowed in sectors such as mainland securities firms, which participate in debt and equity underwriting. Last week JPMorgan 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 announced last month that it was 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, last year launched a partnership with the Bank of China.