Will This U.S. Multinational Open the MF Door to China?
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Thursday, May 9, 2019

Will This U.S. Multinational Open the MF Door to China?

A publicly traded, multinational U.S. bank with a big asset management arm may soon lead the way for other non-Chinese asset managers to make bigger pushes into the Chinese mutual fund business.

J.P. Morgan Asset Management's [profile] Chinese ally, Shanghai International Trust, is auctioning off a two-percent stake in China International Fund Management, Reuters reports. Shanghai International Trust (part of Shanghai Pudong Development Group) currently owns 51 percent of CIFM, while JPMAM owns 49 percent. The wire service adds "that analysts expect the Wall Street bank to lap up" CIFM stock sale, which would make JPMAM the first ever non-Chinese firm to own a majority stake in a Chinese fund firm.

"This is a very, very critical step because this potentially could open the doorway for a number of other deals to begin working their way through the process," Peter Alexander, founder and managing director of Z-Ben Advisors, tells Reuters.

Shanghai International Trust's auction was expected to start today and continue through June 4. If JPMAM wins, they'll still need Chinese regulators' approval to seal the deal.

Chinese regulators changed the rules in late 2017 to allow non-Chinese firms to take majority stakes in Chinese fund firms. And last fall a Chinese SRO unveiled rules to cut down on copycat fund branding, a move seen as friendly to non-Chinese fund firms whose names are often imitated.

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