JPMorgan and Standard Chartered won backing from Chinese regulators on Thursday to expand their operations on the mainland.
The news comes as Beijing encourages foreign companies to expand their business as it seeks to fire up an economy hit hard by tough Covid restrictions until early December, and a weakening global outlook. China is speeding up the process of granting permission to foreign institutions to boost the confidence of overseas investors after its Covid containment policy was scrapped last month.
JPMorgan’s asset management arm will be allowed to take full ownership of China International Fund Management Co (CIFM), in which it holds a 49% stake, the China Securities Regulatory Commission (CSRC) said.The approval came more than two years after the US bank had applied to buy out CIFM, in 2020.
Schroders, Manulife, Neuberger Berman
JPMorgan Asset Management (JPMAM) said that CIFM, which overseas client assets of roughly 170 billion yuan ($25.10 billion), would be integrated into its global operating model.
“Our strategic goal is to significantly grow JPMAM China to become the leading foreign asset manager in China and contribute to JPMAM becoming the leading manager of China assets to global investors,” Dan Watkins, its Asia Pacific chief executive officer, said in a statement.
“Symbolically it’s very important, given both the size of the deal, and also the fact that China is meant to be one of JPMorgan’s primary growth engines moving forward,” said Peter Alexander, managing director of fund consultancy Z-Ben Advisors, which estimates the deal to be worth about $1 billion.
Also on Thursday, British bank Standard Chartered won an approval to set up a new securities brokerage unit in China, the CSRC said.
Chinese regulators and government officials were preoccupied with the zero-Covid policy in 2022, and preparation for October’s 20th Communist Party Congress, but approvals granted to foreign institutions have recently picked up pace, Z-Ben’s Alexander said.
The CSRC gave a green light to Schroders on January 13, allowing the British asset manager to expand its footprint in China by setting up a mutual fund unit.
Canada’s Manulife Financial Corp in November received regulatory approval to take full control of its Chinese mutual fund venture. The same month, US asset manager Neuberger Berman won approval to set up a fund unit in China.
JPMorgan said that CIFM would be operating under the JPMAM brand and its China private fund unit would also be integrated into JPMAM China as it consolidates onshore operations.
Watkins said that integrating CIFM’s domestic expertise with JPMorgan’s resources and global scale “creates powerful momentum”.