The two asset managers aim to explore opportunities in product development and market access across global markets, including China, SSGA said in a press release.
“We believe the timing is right given the pace of the opening up of China’s capital market, strengthening of market oversight and the opportunities it presents,” June Wong, head of SSGA Asia ex-Japan, said in an email reply to FSA. “We see huge potential in the China market, especially following the launch of the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect.”
SSGA can provide solutions across passive, smart beta, alternatives and private equity, while leveraging on E Fund’s strong standing and distribution network in China, she continued.
The US-based asset manager so far has no physical presence in the mainland, despite being the world’s third largest asset manager with $2.4trn in assets under management.
Guangzhou-based E Fund is the third largest asset manager in China with $1trn AUM, and it has a “strong retail distribution network covering 52 million investors”, the statement noted.
E Fund has five stakeholders including GF Securities and state-owned companies. It set up an international arm in Hong Kong in 2008, with clients from Europe, the Middle East and Africa. “The partnership won’t affect our subsidiary in Hong Kong. Instead, it may help us, the company as a whole, to better serve our clients overseas,” an E Fund spokeswoman said.
Back in 2014, E Fund partnered with London-based ETF Securities to list an ETF tracking the MSCI China A index on three European exchanges.
Cross-border partnerships
Other global asset managers are trying different ways to crack the China market.
Firms like Blackrock, Deutsche Bank, JP Morgan and Allianz already have a minority stake in some Chinese fund managers. But the ownership structure for the Allianz venture, GTJA Allianz, will change because partner Guotai Junan Securities is selling the 51% stake at a bidding price of RMB 1.05bn ($151m).
Fidelity International just got the greenlight to launch ‘private securities funds’ for high net worth and institutional investors through its investment management wholly-foreign owned enterprise (IM WFOE), the first foreign fund manager doing so.
Vanguard, Aberdeen, JP Morgan and UBS Asset Management are expected to follow the same path as Fidelity.
In addition to E Fund, other Chinese firms are also expanding offshore. Bosera, for example, partnered with different managers, such as Standard Life Investments, to launch products.
ICBCCS (International), the overseas arm of mainland joint-venture between Industrial and Commercial Bank of China and Credit Suisse, worked with New York-based Wisdomtree last year to jointly launch, market and distribute ETFs.
