Caixin
Sep 09, 2021 09:32 PM
FINANCE

Chart of the Day: Scrapped Ownership Caps See Foreign Financial Firms Expand Footprint in China

As China scrapped the foreign ownership cap in more and more segments of the financial industry in the past few years, an increasing number of international players have gotten the green light to either set up wholly owned entities or take full control of existing joint ventures.

COTD CHART

Foreign ownership limits were scrapped last year for securities, mutual fund, futures and life insurance firms as part of efforts to boost financial opening-up and also to deliver a promise made in phase one of the China-U.S. trade deal.

In August 2020, BlackRock Inc. became the first foreign investor given approval to set up a wholly owned mutual fund business in China. The first fund it launched began operating Wednesday, raising about 6.7 billion yuan ($1 billion) that is expected to be invested in a mix of equities, bonds and other financial products.

Fidelity Fund Management (China) Co. Ltd. was the second to get the green light. The application by Neuberger Berman Investment Advisers LLC to set up its wholly owned mutual fund firm is still under review.

Last month, JP Morgan announced it had been given approval from the China Securities Regulatory Commission to turn a joint venture into the country’s first fully foreign-owned securities firm. The global investment banking giant has also been allowed to take full control (link in Chinese) of its futures joint venture in China.

In the insurance sector, global giant AIA Group Ltd. has set up a wholly owned life insurance company, and German insurer Allianz SE has announced a plan to take full control of its life insurance joint venture in China.

Since the State Council unveiled a batch of policies (link in Chinese) in 2019 to further open up the financial sector, and encourage overseas participation in the credit ratings, money brokering and other industries, foreign firms have increased their participation in these segments.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)

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