Standard Chartered Bank announced it has launched a mutual fund distribution platform in China, making it the latest foreign bank to be able to sell Chinese mutual funds to mainland investors.
The UK bank, which received its licence from China Securities Regulatory Commission on June 25, has partnered seven funds – China Asset Management, E Fund, China Southern Fund Management, Bosera Asset Management, Guangfa Fund Management, China Universal Asset Management and Bank of Communications Schroder Fund – and will seek to add others across a variety of asset classes in upcoming months.
Mutual fund distribution in China is dominated by four banks – Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank – which account for 70% of fund sales in the mainland.
As such, many Chinese fund houses will likely welcome foreign banks participating in the distribution market, due to their well-established systems and product knowledge.
China International Fund Management, a joint venture between JP Morgan Asset Management and Shanghai International Trust, is one such manager eager to partner offshore banks.
“Foreign banks can diversify our client base from Chinese banks. They also have good risk controls and good compliance systems, as well as product knowledge,” Rosemary Jing, executive vice-president at China International Fund Management and head of sales and distribution, tells AsianInvestor.
Standard Chartered may be appealing for Chinese funds given its presence in the mainland – it has 100 branches in China across 25 cities, according to its annual report.
In addition to Standard Chartered, seven foreign banks received distribution licences from the CSRC in June – Citibank, Bank of East Asia, Hang Seng Bank, DBS Bank, United Overseas Bank, Nanyang Commercial Bank and HSBC.
Citibank, Bank of East Asia and Hang Seng Bank have already begun distributing funds in the mainland, with Citibank adding Manulife Teda and Invesco Great Wall to its platform; Bank of East Asia partnering HuaAn Asset Management; and Hang Seng working with HSBC Jintrust Fund Management Company.
Entering China's distribution business has been time-consuming – StanChart says it began preparing its platform in 2008, selecting a research team to focus on these efforts at the time.
There are 1,345 mutual funds in China overseeing Rmb2.5 trillion ($40.7 billion) in assets as of June 30.