Restrictions on the foreign ownership of domestic fund management companies have officially been lifted, according to the China Securities Regulatory Commission (CSRS).
Firms can start applying for up to 100% ownership of domestic businesses in 2020 but no exact date was given.
Right on time
The move was expected.
Earlier this month, Chinese premier Li Keqiang said that the abolition of ownership restrictions for foreign investors in the financial sector will happen in 2020, a year earlier than previously scheduled.
In April last year, the CSRC relaxed joint venture ownership limits for foreign asset managers, allowing them to apply for up to 51% ownership in a Chinese fund management firm.
In addition, the regulator said it intended to remove the 51% cap by 2021, allowing foreign firms 100% ownership of domestic asset managers.
“This move is an important measure taken by the CSRC to implement the decisions and arrangements from the party and the state council to deepen the financial supply-side structural reform, and further open up the financial industry,” the regulator said.
Not everyone is happy
Peter Alexander, managing director of Z-Ben Advisors, had a tempered response to the official announcement in a Linkedin comment.
“Moving forward there are two critical factors interested global managers will need to fully recognise and address,” he wrote.
“First is an honest determination of how well prepared to move on 100% a given asset manager is at present. While there has been much talk about ‘a deep commitment to China’, we’ve seen only a small number (generously talking one hand here) of firms putting real pieces into place,” he said.
“Second is understanding what is meant by the announcement. Moving from application to final CSRC operational approval will take far more time than will be properly planned for.
“Experience has taught us that there will be unforeseen, asymmetrical obstacles that will upend even the most carefully crafted plan,” Alexander added.
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