China will stick to the plan of opening its trillion-dollar asset management market to overseas institutions in April, a gesture that signals the country's determination to open up despite the coronavirus blow and which will provide a boost for global capital markets because of the huge market potential in China, analysts said.
"China's asset management market is going to burgeon to a scale of about $40 trillion in the next three to five years, as urbanisation progresses and individual fortunes increase," Dong Shaopeng, an adviser for the China Securities Regulatory Commission (CSRC), told the Global Times on Tuesday.
China's asset-management market had a scale of about 124 trillion yuan ($17.5 trillion)in mid-2018.
Starting from April 1, China will scrap the foreign ownership limits for fund companies, which means that foreign money managers can apply for licenses to set up wholly owned mutual fund firms for the first time in China.
They have other options, such as boosting ownership of existing joint venture partnerships to 100 per cent under the new rule. JPMorgan will go this route, Bloomberg reported.
"We always have the intention to increase ownership of our joint venture in China. This is one of our promises to the Chinese market, but so far we don't have details to share with the public," a senior executive of JPMorgan Funds (Asia) told the Global Times on Tuesday.
Last year, JP Morgan acquired a 2.0 per cent stake in the Shanghai-based mutual fund joint venture it set up along with Shanghai International Trust & Investment Co, increasing the holding to 51 per cent.
An executive from France-based bank Societe Generale also said in October 2019 that it planned to set up a wholly owned subsidiary in the Chinese mainland. The company didn't reply to an interview request on Tuesday.
China is opening the financial door to overseas investors at an orderly pace. It abolished foreign ownership limits for futures firms in January, and plans to scrap ownership limits on securities firms, according to a CSRC announcement last year.
But Dong, the CSRC adviser, said that some foreign financial companies might postpone their plans to set up subsidiaries in the mainland, not only because of coronavirus-triggered inconveniences but because of unstable China-US relations.
"Some US politicians might thwart their companies' plans to enter or expand business in China, as the unfriendly mood intensifies," Dong said.
But he insisted that US companies will delay, but not cancel their investment plans in China despite the obstructions.
"For one thing, Chinese shares have more reasonable valuations compared with US stocks. For another, China's financial market is still at the early stages of development and provides many opportunities," he said.
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