Study: JPM remains China’s dominant foreign manager

Five of the top 25 foreign firms in China ranked by the consultancy retained the same position as last year. However, there is a reshuffle among the other 20.

“Only a few managers remained in the same position, highlighting the intensity of competition already present,” according to the report released on Monday.

It polled about 100 foreign firms based on weighted scores of their three business lines in China: the onshore business, inbound and outbound business.

The change in ranking was driven by the various developments in China last year: the granting of the investment management Wholly Foreign-Owned Enterprises (IM WFOE) that will allow foreign firms to launch domestic fund products; the opening of the China Interbank Bond Market to global institutional investors; and tighter controls on capital outflow, the report said.

“The outbound business has the lowest weighting due to the relative infancy of most outbound programs and the capital outflow controls that were imposed at the end of 2015,” it noted.

2017 Ranking

Source: Z-Ben Advisors 

JP Morgan’s score increased compared to last year’s rankings. For the onshore business, it has a mutual fund joint venture, China International Fund Management. The firm also recently set up a WFOE in Shanghai, making it score the highest among other firms, Z-Ben explained.

In terms of outbound business, mainly through the Mutual Recognition of Funds (MRF) scheme and the Qualified Domestic Institutional Investor (QDII) for mainland investors to buy offshore assets, JP Morgan has also performed well. 

“JP Morgan has been the only manager to raise significant capital [through the MRF]. Its QDII business remained relatively strong in 2016,” it continued.

On inbound business, however, Blackrock is the top manager. The inbound business includes Greater China assets as well as the assets invested onshore via cross-border channels such as the Stock Connect, Z-Ben noted.

Newcomers to the list

Some firms dropped off the rankings in 2017.

Samsung AM, which was the top manager in inbound business in 2016’s ranking, did not make the top 25 list this year.

Samsung’s Greater China assets under management nearly doubled in 2015, but the firm was not able to duplicate that success in 2016, Z-Ben said.  

Societe Generale, which ranked second in inbound business in 2016, pulled out of the retail fund business in Hong Kong earlier this year. The firm is also mulling the sale of its joint venture in the mainland. 

There were also new firms in the rankings, the majority of them fund houses that set up an IM WFOE in the past year.

One exception is Hang Seng Bank, which launched its first mutual fund onshore via its majority owned Hang Seng Qianhai Fund Management last month, as reported earlier.

“Asset managers have found that focusing solely on one business line isn’t enough to reach the upper echelons of our China rankings. A broad China strategy is needed. All three business lines offer attractive opportunities to foreign investors,” Z-Ben noted.

Source: Z-Ben Advisors