Tue, Apr 21, 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. Studies - Fund managers bullish on equities, alternative asset classes, Hedge funds starting to spurn emerging markets, Insurance companies take aggressive approach to hedge funds despite restricted exposure[more]

    Fund managers bullish on equities, alternative asset classes From Benefitnews.co: Asset allocation and risk continue to be the top issues for institutional investors in 2015 and, while nobody is sure what the economy will do in 2015, investment fund managers remain positive about investm

  2. Investing - New hedge fund strategy: Dispute the patent, short the stock, David Einhorn bets on AerCap as leasing company avoids turbulence, Top hedge funds reveal these best investing ideas, Hedge funds bet big on PetSmart price bump, Victory Park Capital increases investment in upstart to $500m[more]

    New hedge fund strategy: Dispute the patent, short the stock From WSJ.com: A well-known hedge-fund manager is taking a novel approach to making money: filing and publicizing patent challenges against pharmaceutical companies while also betting against their shares. Kyle Bass, head of Hay

  3. Tiger Global falls 2.9% in March, down 5.3% in Q1[more]

    From Reuters.com: Investment firm Tiger Global Management, one of the hedge fund industry's most closely watched players, told clients that its hedge fund lost 5.3 percent during the first quarter, an investor said on Wednesday. Much of the decline came in March when the fund lost 2.9 percent,

  4. It’s not just hedge funds—IMF study finds stability risks from ‘vanilla’ funds[more]

    From MarketWatch.com: Leveraged hedge funds and banklike money-market funds are the parts of the asset-management industry most associated with risks to financial stability. But a report from the International Monetary Fund suggests that “plain-vanilla” mutual funds and exchange-traded funds also ca

  5. Hedge funds gain 2.4% in Q1 driven by currency and commodity markets[more]

    Komfie Manalo, Opalesque Asia: Hedge funds posted positive results last March to conclude a strong first quarter, with performance driven by strong macro trends in currency and commodity markets, complemented by broad-based gains and positioning in event driven, equity hedge and fixed income-b

banner