BlackRock’s Asia-Pacific chairman, Mark McCombe, has said that hiring ex-Goldman Sachs veteran Wang Hsueh-ming as its first China chairman is one of the most critical appointments of his tenure.
The US fund house, which has 8.8% of its global assets sourced from Asia-Pacific, announced yesterday that Wang was set to start in this newly created role on February 18. She will be splitting her time between Hong Kong and Beijing.
Until now BlackRock’s China operation has not had a figurehead. Ji Bing runs institutional sales, and Jean Li joined from FTSE group as its chief China representative last April.
Meanwhile, Winnie Pun is its institutional head for Asia ex-Japan, and Chang Lin-Yun is head of retail for Asia ex-Japan, having recently relocated from Taipei to Hong Kong.
Further, David Graham looks after its joint venture, Bank of China Investment Management (Bocim), which BlackRock took over and rebranded following its merger with Merrill Lynch Investment Managers in 2006.
“We have a lot of people involved with China and that was part of the issue,” McCombe tells AsianInvestor. “What this [hire] allows me to do is bring all of that together and have a more holistic view of how we are approaching business opportunities in the country.
“This could not be a more important appointment. It is about setting a tone and direction for coming decades for BlackRock’s involvement with China, one of the great opportunity markets that still exist in Asia. We are excited about having someone who can develop a strong business.”
Wang retired from Goldman at the end of 2011, when she was an advisory director. But she had joined the bank’s investment banking department in 1994 and made a name for herself working on privatisations and advisory deals as China underwent economic reform and restructuring.
Her relationships are credited with initiating and completing onshore licensing for the bank’s JV, Goldman Sachs Gao Hua, in 2004. She retired from Goldman briefly before returning in 2005.
She also spent two years as China chairman of Goldman’s investment management division, establishing its asset management and private wealth management platforms in the country.
McCombe points to Wang’s experience as invaluable, likening China’s current opening up to the privatisation process of the 1990s. “Back then you knew there was change coming, but you weren’t clear until really late on exactly what the direction was,” he says.
“The reason Goldman Sachs was able to take such a dominant position [in China] as an international investment bank was really because they had an understanding and a proximity.
“The appointment of Hsueh-ming will give us a proximity to Chinese decision-making that we have not had prior to this, and in fact very few asset management companies have.”
He argues that the next five years in China “are going to be the most exciting in terms of investment management from a reform agenda perspective. I am absolutely convinced that the firms which understand that reform agenda and play into it will have the greatest opportunity of building a long and sustainable business with China.”
He points to numerous China opportunities that are bubbling away and says BlackRock is looking at a lot of them, including increasing QFII and QDII quotas, setting up wholly owned foreign entities “in places such as Shanghai” and entering the domestic ETF market.
“But for pretty much the whole time I have been in this role [about 13 months], I felt that what we have really needed is somebody who has deep insight into how things will evolve in China and that will help us make the right kind of investment decisions.”
He adds that Wang’s appointment will add a second string to BlackRock’s China bow, with clients globally hungry for insight. “I imagine Hsueh-ming will build a bridge between our clients globally and the emerging opportunities that we are seeing in that market.”
BlackRock received a QFII licence for subsidiary BlackRock Institutional Trust Company in July 2011, and was awarded a $100 million quota in June last year. That allocation went straight to be managed by quant managers out of San Francisco, confirms McCombe.
Separately, BlackRock North Asia is now awaiting its own QFII quota, having received its licence last November. “What we wanted the second licence for was building the Asia-Pacific platform,” McCombe adds.
“As the regulations changed [last June, when separate legal entities were allowed to apply for separate licences] we recognised that would give us the ability to build a broader product set.”
BlackRock had $3.67 trillion in assets under management globally as at the end of last year, of which $322 billion was sourced from Asia-Pacific, by AsianInvestor numbers.
A spokeswoman for Goldman Sachs confirms that Wang officially retired at the end of 2011 and was not replaced. Zhang Xing is currently chief executive of Beijing Gao Hua Securities, Goldman's partner in China which oversees onshore asset and wealth management businesses.
Meanwhile, Sheila Patel is still transferring from London to Singapore as head of GSAM’s international operations. She takes over the Asia-Pacific leadership from Oliver Bolitho, who was named Asia-Pacific chairman to focus on development of its client franchise.