Morgan Stanley Wins Approval to Fully Own China Fund Business

Morgan Stanley Investment Management becomes the 7th foreign firm approved to fully own a domestic mutual fund business.

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Morgan Stanley Investment Management becomes the 7th foreign firm approved to fully own a domestic mutual fund business. The CSRC (China Securities Regulatory Commission) has granted regulatory approval to Morgan Stanley Investment Management allowing it to take full ownership of its Chinese joint venture, Morgan Stanley Huaxin Fund Management. Morgan Stanley Huaxin Fund Management, headquartered in Shenzhen, was launched as a joint venture in 2008, to provide investment management services to retail and institutional clients through mutual funds and segregated management accounts. The CSRC approval will enable Morgan Stanley Investment Management to increase its stake in the business from 49 percent to 100 percent, subject to business registration and regulatory procedures. It will become the 7th foreign firm approved to fully own a domestic mutual fund business. “Wholly owning our China mutual funds business will allow us to more fully serve this dynamic asset and wealth management market and adds a significant pillar of growth to our global investment management franchise,” said Dan Simkowitz, head of investment management at Morgan Stanley. “As we further invest in our onshore platform, we will bring over our four decades of industry experience and global research expertise in sustainability and diversified portfolio management to help domestic clients achieve their investment goals.” Last month, the CSRC also granted QDII status to Morgan Stanley Huaxin Fund Management, enabling it to offer offshore investment management services to domestic investors. Chinese regulators have recently sped up approvals for foreign companies and investors looking to enter the domestic market as the country looks to bolster the economic recovery while it emerges from three years of its zero-Covid policy. Last month, JPMorgan’s asset management arm was granted approval to take full ownership of its own fund management venture, while Standard Chartered was granted in-principle approval to set up a China securities firm. Earlier in the month, the CSRC also granted approval to Schroders allowing it to set up a domestic mutual fund unit. Other recent mutual fund approvals were granted to Neuberger BermanFidelity International, and Manulife. BlackRock was the first foreign firm to acquire full control of a Chinese mutual fund company after foreign ownership caps were scrapped in the mutual fund industry in April 2020. VanEck and AllianceBernstein have also submitted applications to the CSRC seeking to set up wholly foreign-owned mutual fund companies in China. Meanwhile, a Citadel subsidiary known as Castle Investment Asia has submitted an application to the CSRC seeking to be granted QFII status, in order to invest in China's A share market.
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