BOC sets up JV to explore fund market
By Chang Tianle
Updated: 2004-07-29 09:12

Top executives of BOC International Investment Managers, the latest fund management company to enter China's fledging fund industry, say they are ready to meet the challenges of the industry and fellow competitors.

"China's fund industry is still in its infancy so that, as a new company with a long-term commitment, we will have a major role to play," said Chen Ru, managing director and chief executive officer of the company.

Approved by authority on June 28, BOC International Investment Managers is a joint venture between Bank of China International (BOCI) Holdings, BOCI (China) and Merrill Lynch.

BOCI Holdings - the Hong Kong-based investment banking arm of Bank of China and Merrill Lynch Investment Managers (MLIM) each holds a 16.5 per cent stake in the new firm. BOCI (China), itself a majority-owned subsidiary of BOCI Holdings, holds the remaining 67 per cent.

China's real fund industry dates just from 1998 and the first mutual fund was launched less than three years ago.

Although there are now more than 50 fund managers which have issued more than 140 funds, it is still a small market compared to that of Hong Kong, which is home to more than 180 fund management companies and more than 1,800 funds.

"Thinking about the market size and its potential, China's fund industry is still in its initial stage and we are by no means a latecomer," said chief investment officer, Tina So, who was a director at the Security and Futures Commission of Hong Kong before joining the company.

As more foreign investors become able to invest in China's securities market, and Chinese residents as well as fund managers may eventually be allowed to invest in overseas equity markets, the China fund industry will face both pressure and opportunities.

So said she believes that the company's international vision and standards will eventually make the company a leading player in the market in the next five years.

"I want to make sure our fund managers will share a similar global vision with their Merrill Lynch colleagues in London. We consider ourselves an international fund manager based in Shanghai," So said.

In turn, the clients will enjoy a world class service even if their money is allowed to be invested in domestic markets only, she said.

Although the market is still tightly regulated by the authorities, fund management companies, especially joint ventures like BOC International Investment Managers believe that they will be able to share their experience from around the world as the government further deregulates the market.

As China's capital market evolves, there will be more institutional investors such as pension and retirement funds and insurance companies.

"Institutional investors will ask for more sophisticated products. We are confident that our company will be ready to provide such products when the regulatory framework allows," said David Peng, deputy CEO of the company.

The new joint venture will soon submit its first product to China Securities Regulatory Commission for approval.