China Levels Playing Field for Foreign Asset Managers

By enlarging their investment scopes, the regulator is also paving the way for them to expand their businesses in China.

China’s regulators are to allow wholly foreign-owned enterprises (WFOEs) to invest in Hong Kong-listed stocks and provide clearer rules on interbank bond investing so that they can compete more fairly with domestic players.

The new policies, rolled out under the guidance of the China Securities Regulatory Commission (CSRC), send a strong signal to the international market that China is opening up the asset management industry, the Asset Management Association of China (Amac) said on August 9.

“Their investment scopes have been enlarged, enabling them to compete in almost the same way as domestic fund houses … this is a good thing,” Rachel Wang, director of Chinese fund manager research at Morningstar, told AsianInvestor.

By creating a more level playing field, it could help to attract more foreign managers to establish themselves in China, which will help drive competition and lead to more quality products for investors, she said.

When WFOEs first entered the mainland Chinese market the regulator barely allowed them to invest in interbank bonds. They couldn’t invest through stock connect schemes either, which meant they were treated differently to domestic asset managers, an analyst at a Shanghai-based consultancy firm, told AsianInvestor on condition of anonymity.

But the new … [read more]

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