Shaw Capital Working Management Tips: Fidelity seeks to enter China via trust venture

http://economictimes.indiatimes.com
23 FEB, 2011, 11.27AM IST,REUTERS
by: morgan stanley
SHANGHAI: U.S. mutual fund giant Fidelity is actively preparing to enter China by securing a trust company licence in one of the world’s fastest-growing asset management market, a person familiar with the situation said on Wednesday.
Fidelity, which a few years ago dropped its venture talks with China’s Hua An Fund Management Co , is now seeking to invest in a Chinese trust company, which would enable it to launch products in the mainland, said the source, who declined to be identified because he was not allowed to speak to the media.
A spokeswoman at Fidelity declined to comment. “Many foreign and domestic investors are seeking a trust company licence, which would enable them to conduct a wide range of finance-related businesses,” said Wei Tao, Beijing-based analyst at China Securities Co.
Subject to less regulatory scrutiny than banks or mutual fund houses, Chinese trust firms are allowed to launch a range of products to invest in stocks, bonds, infrastructure and real estate projects.
Some overseas banks including Morgan Stanley and Macquarie Group Ltd have already set up Chinese trust joint ventures, in which a single foreign institution can hold up to a 20 percent stake.
The sector is attracting a new wave of foreign investor interest. The Financial Times reported on Wednesday that JPMorgan Chase & Co, in addition to Fidelity, was preparing to apply for a Chinese licence.
Fidelity is hoping that by investing in a Chinese trust company, it can launch products under China’s Qualified Domestic Institutional Investor (QDII) scheme, which channels Chinese money into overseas capital markets.
Fidelity’s star manager Anthony Bolton is well known in China. He frequently makes speeches at financial conferences in the mainland, and books promoting his investment philosophy are popular at Chinese book stores.
Last week, Bolton’s Fidelity China Special Situation Fund wrapped up a share offering, raising its targeted proceeds of 166 million pounds ($269 million), more than a third of which came from new investors.
The fund has risen about 8 percent in net asset value since its launch in April 2010.