JPM AM aims for onshore private fund license

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The US firm is reportedly about to join other global asset managers in applying for a private fund management (PFM) license in China, according to local media.

Desiree Wang Qionghui, head of China at JP Morgan Asset Management, leads the firm’s Shanghai bureau.

She told China’s official Economic Information Daily that the firm is preparing for an application for distributing funds to onshore qualified investors.

In August 2016, the firm set up its asset management wholly foreign-owned enterprise (AM WFOE) in Shanghai.

However, the authorities have not clearly defined the differences between an AM WFOE and an investment management entity.

Other foreign fund houses have set up a wholly-owned business in China through an IM WFOE structure. A total of 17 private fund products are registered for sale on the mainland, according to database of the Asset Management Association of China.

The business scope for JP Morgan’s Shanghai office includes asset management, investment management, investment consulting and other general consultancies, FSA reported previously.

The establishment of the Shanghai office is the prerequisite for the manager to obtain an authorisation to distribute funds onshore. A PFM license would permit the firm to launch China-focused private funds targeting domestic high net worth or institutional investors.

Wang said in the report that the further opening of China’s capital markets should bring in more foreign capital and result in increased returns for domestic investors.

China’s asset management has additional growth potential due to the inclusion of A-shares in MSCI indices and the expansion of the renminbi-denominated bond market, she added.

Moreover, she believes the regulatory environment favours the overall fund industry as the new asset management guidelines will standardise the market with better quality investment management products.

Apart from the plans to tap China’s sophisticated investors, JPM AM also eyes a majority stake in the joint venture China International Fund Management (CIFM), which sell public funds to retail and institutional investors.

Shanghai-based CIFM was established in May 2004. Shanghai International Trust and Investment currently holds a 51% stake in the joint venture, according to the firm’s website.

The firm expressed interest in May after China’s securities regulator relaxed joint venture ownership limits for foreign players, including asset managers and securities firms. Foreign players may now apply for a majority ownership in a Chinese joint venture.

Additionally, a Hong Kong-domiciled fund managed by JPM AM has dominated 80% the fund flows through the Mutual Recognition of Funds (MRF) scheme, the cross-border fund passporting programme between Hong Kong and the mainland.

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