Many foreign fund managers are pinning their China distribution strategies on the WFOE scheme. But the programme's limitations pose familiar problems for scaling the business.
Chinese regulators are putting up unnecessary barriers to fund managers wanting to take advantage of mutual recognition of funds between Hong Kong and the mainland, believe industry experts.
Mainland hedge fund Zexi Investment and its head, Xu Xiang, have been blacklisted – and sources say more big cases are about to break.
Chinese investment industry executives are unhappy about how quickly local regulators have tightened policy on private funds. More clarity would help both domestic and foreign players.
China bond funds are growing at the expense of balanced and money-market products and as institutions increasingly favour 'tailor-made' mutual funds over segregated accounts.
Minsheng Royal Asset Management, the mainland's second biggest segregated-account subsidiary, has received a six-month ban, as Beijing starts consulting on tighter capital rules.
Offshore asset managers’ wholly foreign-owned entities in China can now register to operate as onshore private fund firms, with Aberdeen, Bridgewater and Fidelity set to be first in line.
The number of Chinese fund firms seeking licences in Hong Kong is growing fast, even as the city’s investment sector faces a tough year, says one industry expert.
Mainland authorities are said to be considering whether tighter rules are needed for the domestic mutual fund industry, which hit the $1.3 trillion mark in December.
The UK fund house has set up offices in Beijing and the Shanghai free-trade zone, and as many as 15 more are said to be making similar moves or considering doing so.
Financing providers have been registering as private fund managers in China purely to raise capital. New rules aim to put a stop to this, and further measures are said to be on the way.
The Beijing Administration of Industry and Commerce has reportedly suspended registrations of private investment firms as part of a wider tightening of regulations.