Posted inBusiness moves

UBS in talks over fund licence in China

UBS is only the latest foreign firm to throw its hat in the ring in China by seeking to apply for a mutual fund licence.

UBS is in informal talks with China’s securities regulator about applying for a mutual fund licence, according to a report from the Wall Street Journal.

UBS declined to comment when contacted by FSA.

After BlackRock became the first foreign firm to obtain approval from the China Securities Regulatory Commission (CSRC) in 2021 to set up a wholly-owned mutual fund business, the CSRC had paused its approvals until the second of last year when more firms began getting the green light again.

In November, Neuberger Berman received the go-ahead to set up a wholly owned mutual fund business and a month later Fidelity International got the same approval.

Meanwhile, Manulife Investment Management, JP Morgan Asset Management and Morgan Stanley Investment Management all received approval to buy out their local partners.

Schroders is the latest to receive approval from the CSRC to establish a wholly foreign-owned public fund management company from scratch.

UBS also became the first foreign bank to take a majority stake in a securities joint venture in 2018.

Despite the flurry of recent approvals, foreign firms face an uphill task trying to gain any traction in China.

BlackRock has launched four products onshore so far, including three equity and one fixed income mutual fund product.

Although, in January, the BlackRock China New Horizon Mixed Securities Investment Fund published its report for the fourth quarter of 2022, which saw its net asset value fall by Rmb324m ($46.8m) to Rmb4.41bn when compared with the third quarter.

Meanwhile, although BlackRock’s second onshore public fund, the HK Stock Connect Long Horizon Mixed Securities Investment Fund, did not see a significant redemption in its fund, some onshore media noted that the fund only raised Rmb573m upon its launch, compared with Rmb6.68bn for the first fund.

UBS currently owns a 49% stake in a JV with SDIC Taikang Trust Co. The Wall Street Journal reported that the bank has held discussions with its Chinese partner on taking control of the unit but the two sides could not reach a deal.

Part of the Mark Allen Group.