Photo/Shetuwang

Sept. 26 (NBD) -- Foreign financial institutions have been speeding up their expansion pace in China.

As of September 25, 14 foreign investment banks and asset management firms have entered the Chinese market. They include BlackRock, Fidelity International, UBS, Fullerton Fund Management, Man Group, Value Partners Group, Neuberger Berman, Aberdeen Asset Management, Schroders, AZ Investment Management, Winton, Bridgewater Investment Management Co. Ltd, and APS Asset Management. Of them, only the last two haven't launched private equity funds yet.

UBS and Winton issued separate private funds in September, bringing the total number of private funds issued in China by foreign firms to 19. Five of those funds hit the market last year, which indicates an accelerating issuance pace by foreign investment firms.

Since 2018 Boao Forum for Asia, China's financial market has opened wider to foreign investors and more overseas capital have been flowing to the A-share market through the stock connect device.

Moreover, A-shares was included into MSCI Emerging Market Index in June and is possibly to be taken into FTSE Russell index this week, creating a more favorable investment environment for foreign investors.

When BlackRock issued its first private fund in China this July, it drew wide attentions, because all the money raised will be invested exclusively in A-shares and the firm charges a comparatively low management fee rate which is 0.75 percent per year.

Lou Chao, fund manager at UBS China, expected prudent monetary policies after China eases the financial environment for foreign capital and stabilizes growth rate. Performance of major SOEs will improve due to restructuring efforts, Lou added.

Li Jing, vice chairman of Asia Pacific at JPMorgan Chase, noted that JPMorgan is bullish on China's economy in spite of short-term challenges. China will continue to transform itself from an export-driven economy to a demand-driven one, and new economy will become an important growth driver in years to come. As China boasts the world's second largest bond market, it's worth investing, Li said.

Ning Jing, fund manager with Fidelity International, believed that China is facing both challenges and opportunities, adding this is a good timing for investors to build their A-share portfolios.

Investors are seeking for the next growth opportunity in China, but many of them overlook profit in share dividends, Ning added. An increasing number of listed companies begin to pay out cash dividends as they are valuing profit rate and paying out dividends with money saved from debt-cutting. 

Email: tanyuhan@nbd.com.cn