Barings unveils plans for HK-domiciled fund range

The firm is proposing to launch a range of locally domiciled funds by early 2015 to capitalise on the pending HK-China mutual recognition scheme. We talk to regional CEO Gerry Ng.
Barings unveils plans for HK-domiciled fund range

Baring Asset Management has announced plans to launch a Hong Kong-domiciled funds range, with an eye firmly on the pending launch of HK-China mutual recognition.

The firm, which has $14.4 billion in Asia ex-Japan assets and some 130 staff in the region, sent out a press release yesterday announcing its intention to bring this range to market “in early 2015”, subject to regulatory approval.

Gerry Ng, the firm’s chief executive officer for Asia ex-Japan, tells AsianInvestor he has no prior knowledge on when the eagerly anticipated mutual recognition scheme will be launched, amid widespread speculation over its arrival date.

“It is a level playing field,” laughs Ng. “It’s just that we would hope to have received some level of market information by that stage [early 2015].”

This explains why Barings’ release is non-specific. The release does state that the firm has decided, in principle, to appoint HSBC as an administrator, trustee, transfer agent and custodian for the range. It also mentions that it anticipates increased demand for locally domiciled product.

Asked for more details, Ng is understandably cautious, dictated by the fact that operational specifics on the pending scheme have still not been made public.

“Ever since the announcement [of mutual recognition] was made last year by Alexa [Lam, deputy CEO of Hong Kong’s Securities and Futures Commission], we have been looking at this,” Ng confirms.

He adds that Barings has since engaged in market research, speaking to gatekeepers at insurance companies, private and consumer banks as well as to managers internally on where they see product demand in the next 18 months.

“We try to get a sense of whether certain products will appeal locally in Hong Kong, and we test for potential appetite in other jurisdictions as well, with an opportunity to cross-sell into Taiwan and Korea,” notes Ng.

In Hong Kong Barings has a Greater China equities team, a pan Asian equities team and an Asian fixed income team. It has had a base in the city since 1973, and now has over 60 staff there, including fund management, sales and client service and infrastructure for the region. It also has about 50 fund managers and sales staff in Korea, and 25 in Taiwan.

As a firm, Barings has tended to develop Ucits product largely established in Dublin, which is available for sale into Asia. This latest announcement represents a considerable commitment by the firm to Asia and Asia-based product.

Asked for details on the types of product Barings may introduce, Ng says: “When we are looking at casting a range of funds, we want to be as flexible as possible in the sense of trying to appeal to as many markets as possible.

“The obvious target [for a range of HK-domiciled funds] is Hong Kong and China, but we will look to see if we can bring this to Korea and Taiwan also. It will cover range of products, which could be domestic or international equities, multi asset and fixed income.”

As he points out, it is difficult to be more specific, both not wishing to pre-empt the regulator and also because full details of mutual recognition have yet to be announced.

Asked if there would be any hiring requirements on the back of this move, Ng says the firm is always checking if its resourcing is appropriate in Asia.

“There may be opportunities [to bring in additional personnel],” he states. “We will have to look at whether we have sufficient resources to support the growth of [our business in] Asia.”

Barings has a strong domestic funds business in Korea following its acquisition of SEI Asset Korea completed last year, as reported by AsianInvestor.

Asked if the firm had an eye on the ARFP passport scheme, which is due to launch in 2016 and includes Korea, Ng adds: “We are keeping an eye on all the other passport schemes from a business development point of view.”

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