Tue, Jan 27, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Asia Pacific Intelligence

KPMG investment team finds huge potential international growth for domestic Chinese fund management firms

Tuesday, April 09, 2013

Charles Muller

Charles Muller, member of the global KPMG leadership team, reports from his recent trip with his colleagues to Hong Kong, Shanghai and Beijing talking with asset managers, trade bodies and regulators, that domestic Chinese fund managers will soon be venturing out of China. Muller can see a time, not that far ahead, when funds will routinely be priced in dollars, Euros and the Renminbi.

The firm found that Hong Kong is in the process of updating its regulation on fund domiciliation in advance of a possible mutual recognition agreement with mainland China. "While for the moment most funds registered for distribution in Hong Kong are domiciled in Europe or in the Cayman Islands, this could very well change soon. Indeed, Hong Kong has asked mainland China for a mutual recognition agreement of funds domiciled in both jurisdictions, a request that seems to be favourably received in Beijing. This would mean that funds domiciled in Hong Kong could be distributed in mainland China and vice versa."

"This is an extraordinary opportunity for Hong Kong to establish itself not only as a fund distribution but also a fund domiciliation centre. Obviously, if the agreement materializes,  global asset managers will want to create Hong Kong domiciled funds to access Chinese customers," said Tom Brown, KPMG global leader for Investment Management.

"If structured in the right way, the same funds could then also be marketed in Europe to institutional investors via AIFMD," added Muller. "But for this to happen, Hong Kong will need to update its regulation on fund domiciliation, a process that has already started."

Muller found that all Chinese asset managers are now considering extending their activities abroad and their first step is to open a branch in Hong Kong and then to expand to Europe and the US. "We have three Chinese asset managers with UCITS funds in Europe already. What they want to do is get accustomed to the European fund industry and to find investment that can go back into China" Muller said.

Internally, Chinese fund law is changing rapidly as growing appetite and sophistication drives expansion overseas. "Their know-how is investing in China" Muller says. "European investors want to invest in China because it gives them exposure to a new currency and a new economy and all investors want diversification."

It's not going to happen overnight, Muller estimates, as the Chinese approach change cautiously. "For a long time Chinese asset management has been very traditional but sophistication is growing and we were asked many questions on hedge funds as well."

 
This article was published in Opalesque's Asia Pacific Intelligence our monthly research update on alternative investments in the Asia-Pacific region.
Asia Pacific Intelligence
Asia Pacific Intelligence
Asia Pacific Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - U.S. investors favor currency hedged Europe ETFs as euro tumbles, Quants win back investors as Swiss franc fuels volatility gains, David Einhorn's $7bn hedge fund is loading up on this stock, Hedge fund BlueMountain Capital unveils Ocwen Financial short, claims default on notes[more]

    U.S. investors favor currency hedged Europe ETFs as euro tumbles From Reuters.com: U.S. investors stung by the falling euro who want to stay invested in Europe are turning to exchange-traded funds designed to strip out the impact of the region's currency. The biggest among so-called "cur

  2. News Briefs - Millennials use tech tools to jump into investing, Winklevoss twins to launch bitcoin exchange with FDIC insured deposits, Robertson’s legacy from hedge funds to New Zealand, Real estate managers exploring smaller open-end funds[more]

    Millennials use tech tools to jump into investing It is the Facebookification of monetary investing. From social networking platforms that enable young investors to stick to every other's stock-picking mojo, to internet sites for initially-timers hungry for a piece of the Silicon Valley

  3. Top performing private equity firms you should invest in[more]

    Komfie Manalo, Opalesque Asia: Professor Oliver Gottschalg of Paris-based HEC Business School, also known as Ecole des Hautes Etudes Commerciales de Paris has released his annual ranking of the top performing private equity firms. The 2014 HEC-DowJones Private Equity Performance Ranking

  4. Comment - Why invest in hedge funds if they don't outperform the market?[more]

    From Forbes.com: Hedge funds have always been a bit exotic and an enigma to some, but bottom line they are supposed to produce good returns using a range of strategies including global macro, event driven and relative value (arbitrage). And, sophisticated or high-net-worth individuals (HNWIs) could

  5. Owen Li 'truly sorry' for blowing up $100m of hedge fund’s assets[more]

    From CNBC.com: A hedge fund manager told clients he is "truly sorry" for losing virtually all their money. Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm's capital—down from the roughly $100 million it ran as of late March. "I take r