The window period for "foreign capital entering China" in the Year of the Rabbit opens again, and brokers and funds are concentrated

　　Author: Zhou Ailin

　　The Chinese New Year in 2023 is approaching, and the licenses that many international financial giants have been looking forward to for many years have also been concentrated before the end of the year.

2018 and 2019 were the peak period of China's financial opening-up, and many foreign capitals poured into the mainland to set up entities. The subsequent epidemic delayed the pace of foreign investment deployment.

Will the Year of the Rabbit become another critical window period?

In addition, breaking through the Chinese market is not an easy task. In addition to long-term investment patience, capital, local experience and channels, it also requires international institutions to bridge the gap between China and foreign countries.

　　Brokerage and fund licenses are centralized

　　According to the reporter of China Business News, on January 19, 2023, the website of the China Securities Regulatory Commission showed that the establishment of Standard Chartered Securities (China) Co., Ltd. was approved. The registered place of Standard Chartered Securities is Beijing, and the registered capital is RMB 1.05 billion.

The scope of business includes securities brokerage, self-operated securities, securities underwriting, and securities asset management (limited to asset securitization business).

　　As early as 2021, Standard Chartered submitted an application for the establishment of a securities entity.

In 2021, Bill Winters, the global chief executive of Standard Chartered Group, said in an interview with a reporter from China Business News, “We don’t want to compete with existing securities companies in a wide range of businesses. We are not a large stock underwriter. It's not an equity underwriter, it's not an equity broker, that's not what we do." Still, he said, clients do have fairly complex requests for Standard Chartered to access capital in a variety of different ways market.

We can create products ourselves or partner with other institutions, which can obviously solve some of our clients' financing needs.

　　In addition to securities entities, international asset management institutions have been more active in the Mainland in the past two years.

That is, on January 20, JPMorgan Asset Management (hereinafter referred to as "JPMorgan Asset Management") told the first financial reporter that it had obtained the approval of the China Securities Regulatory Commission to complete the acquisition of China International Fund Management Co., Ltd. (hereinafter referred to as "Shanghai Fund Management") Vote for Morgan").

China International Investment Morgan will operate under the brand of JP Morgan Asset Management (JP Morgan Asset Management China) in order to better integrate the Chinese business into the global operating model.

　　In addition, the agency stated that the wholly foreign-owned enterprise (WFOE) under JPMorgan Asset Management will be integrated into JPMorgan Asset Management China.

All CIPM employees will eventually move into JPMorgan Chase's offices in the landmark Shanghai Center in Lujiazui.

Wang Dazhi, general manager of China International Investment Morgan, will become general manager of JPMorgan Asset Management China, and he will report to Dan Watkins, CEO of JPMorgan Asset Management Asia Pacific.

　　Mary Callahan Erdoes, Global Chief Executive Officer of JPMorgan Asset and Wealth Management, told reporters: "Received regulatory approval to acquire a Chinese onshore fund company - this is an extremely exciting development milestone, reflecting our long-term and enduring interest in the Chinese market. Investment and commitment. Relying on the scale and global investment expertise of JPMorgan Chase, we look forward to assisting Chinese investors to improve their investment plans, achieve global diversification of investment, and at the same time assist overseas investment and funds to enter the Chinese market."

　　In fact, Morgan Asset Management has taken this step for nearly 4 years.

As early as 2019, Morgan Asset Management bid for a 2% stake in China International Investment Morgan, and its shareholding ratio will rise to 51%, becoming the largest shareholder of China International Investment Morgan; Shanghai International Trust has initially reached a commercial consensus to acquire 100% of China Investment Morgan's equity.

This shareholding change needs the final approval of the China Securities Regulatory Commission, and the official announcement in 2023 will finally draw a successful conclusion to this transaction.

　　From November 2022 to the present, many foreign-funded asset management companies have been approved for public offering fund licenses.

On November 25, 2022, following BlackRock, Neuberger Fund Management (China) Co., Ltd. was recently issued a public offering fund business license by the China Securities Regulatory Commission, becoming the second foreign company to newly establish a public offering fund business in China Sole proprietorship fund management company.

　　The reporter learned at the time that Neuberger is currently actively preparing for the release of products. The first fund product may be a fixed-income category. In the future, it will prepare to issue ESG (environmental, social, governance) themed funds.

　　On December 9 of the same year, Fidelity International announced that its wholly foreign-owned enterprise, Fidelity Fund, had obtained a securities and futures business license issued by the China Securities Regulatory Commission.

After obtaining the public offering license, Fidelity International can provide Chinese individual investors with onshore investment products and solutions, and at the same time provide institutional investors with asset management services.

　　According to the reporter's understanding from people familiar with the matter, Fidelity Fund is also actively preparing for product issuance, and the first fund product to be issued will be a stock fund.

In addition, with the implementation of China's "third pillar", the institution also hopes to give full play to its advantages in pension investment in the mainland market.

Huang Xiaoyi, general manager of Fidelity Fund, said at the time: "We hope to build a financial service company in China that focuses on pension and asset management services and has diversified business fields. With Fidelity's global investment expertise and a professional team focused on the local market, We will be committed to deeply understanding the unique needs of Chinese investors and extensively exploring investment opportunities in the Chinese market."

　　On January 13, 2023, the China Securities Regulatory Commission officially approved the establishment of Schroeder Fund.

Prior to this, Schroeder Bank of Communications Wealth Management Co., Ltd. received regulatory approval for opening in January 2022 and a business license in February.

　　The agency stated that China is the top priority in the global strategy of Schroeder Investment.

Since the establishment of the first representative office in mainland China in Shanghai in 1994, Schroder Investment Group has accumulated valuable investment management experience in serving the needs of institutional investors for more than 28 years, and invested through qualified domestic institutions Investors (QDII) and participating in the Mainland and Hong Kong Mutual Recognition of Funds (MRF) arrangement, providing overseas investment products for domestic individual investors.

　　Guo Wei, president of Schroder Investment China, told reporters: "We will actively promote the preparation work. As the Chinese government further opens up the Chinese financial market, we believe that the fund retail market and pension market in mainland China are ready to welcome overseas investment. Institutional differentiated investment options."

　　Breaking through the Chinese market is not easy

　　Many industry insiders told reporters that foreign public funds and foreign securities firms have a long way to go in China.

　　Taking the asset management industry as an example, in order to expand China's retail market, the first thing foreign public funds need to do is to strengthen the investment research team and accelerate the release of products.

To further expand the elderly care market, foreign capital needs to make the product scale and long-term performance meet the specified requirements.

　　At present, according to regulatory regulations, the types of fund products that personal pensions can invest in include: pension target funds with a scale of no less than 50 million yuan at the end of the last four quarters or a scale of no less than 200 million yuan at the end of the previous quarter; stable investment style, Stock funds, mixed funds, bond funds, funds of funds and other funds regulated by the China Securities Regulatory Commission with clear investment strategies, compliant and stable operations, and suitable for long-term investment of personal pensions.

In addition, fund managers and fund sales agencies should establish a long-term assessment mechanism, and the assessment period for personal pension investment fund business, product performance, and personnel performance should not be shorter than 5 years.

　　As more and more global fund companies develop in the mainland, Wang Rui, Director of China Fund Research Center of Morningstar, told reporters that although the success of these foreign fund companies in China’s business development is still uncertain, they will do their best for them. China's mutual fund market has brought more competition and vitality, which is good news for investors.

On the one hand, they will bring more product choices to Chinese fund investors, and at the same time, they will also promote Chinese fund companies to learn from their excellent practices in company management, investment and risk control, cultivate mature investment concepts, and establish mature investment research and risk management framework.

　　"In the process of thinking collision and mutual reference between Chinese and foreign fund companies, the overall quality of China's fund industry will be further improved, and investors can also benefit from it." Wang Rui said that although the regulatory changes have made it easier for foreign fund companies to enter China The market provides convenience, but they still face challenges such as localization of investment research and differentiated competition with existing products in the mainland.

　　For foreign securities companies, the challenge may be even greater, and the above-mentioned asset management business is actually only a part of the many business lines of securities companies.

It is not easy to build a securities company from scratch. In addition to consuming capital, the deployment of various business lines and personnel will test the long-term commitment of foreign capital to the Chinese market.

For example, it has been in business for nearly three years, but Nomura Orient International Securities has previously obtained four licenses to set up a wealth management department, an institutional business department, a research department, an asset management department, and a proprietary trading department.

In the next step, preparing for the application for an investment bank license will be the key.

　　Sun Dongqing, general manager of Nomura Orient International Securities, said in an interview with a reporter from China Business News, “The important licenses we value include fund sales licenses, margin financing and securities lending licenses, and sponsorship and underwriting licenses. We also hope to obtain derivatives trading licenses. , These licenses are very important in the development process of securities companies, and they must be prepared."