China fund managers assert competitiveness amid challenges
07 January 2013
By Hui Chinghoo
Chinese fund managers are expressing confidence in the face of possible fallout stemming from the new measure unveiled by the China Securities Regulatory Commission (CSRC) on December 31 that allows insurance asset management firms, securities brokerages, and private equity firms to compete with them in the mutual fund space.
China Universal Asset Management (HK) Investment Director Michael He tells Asia Asset Management that some insurance firms and securities brokerages will reallocate their assets currently placed among third party fund managers to their internal investment arms when the measure comes into effect.
However, Mr. He notes that domestic fund houses retain their competitive edge and should be able to keep existing clients. Their clients will tend to incur lower transaction costs when changing fund compositions, for instance.
Under the new initiative, the AUM requirement for eligible securities brokerages and insurance asset management firms will be no less than RMB 20 billion (US$3.17 billion) and RMB 100 billion for PEs. The CSRC also strictly regulates financial institutions’ mutual fund operations, in regard to fundraising and information disclosure, for example.
A CSRC spokesperson said the initiative is aimed at further liberalising and diversifying the country’s asset management industry.
Separately, 25 mainland financial institutions have recently become affiliated with the Asset Management Association of China, including firms from the insurance asset management industry, such as PICC Asset Management, the asset management vehicle of the People’s Insurance Company.
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