Fund firm sets up JV in Hong Kong

By Wang Yanlin  |   2008-7-4  |     ONLINE EDITION

CHINA Southern Fund Management Co Ltd will set up a joint venture asset management company in Hong Kong to become the first domestic fund firm to secure a foothold in an overseas market.

China Southern Fund Management will team up with the Oriental Patron Financial Group to form the joint venture, a company official who declined to be named said today.

He said the deal has obtained approval by the China Securities Regulatory Commission and the venture will be named China Southern Oriental Patron Asset Management Co Ltd.

He declined to reveal the investment or China Southern Fund Management's stake in the new venture. The company may hold a press conference on Monday in Shenzhen to officially announce the venture.

Established in 1998, China Southern Fund Management was among China's biggest fund companies and was the first to sell products under the Qualified Domestic Institutional Investors scheme in 2007.

To become a global asset management company is one of the major goals of China Southern Fund Management, said its general manager Gao Yuliang in an earlier report.

"It is a firm step forward for China Southern Fund Management to get closer to that goal. Meanwhile, it may become a pioneer and lead other firms to expand overseas," said Zhang Qi, an analyst with Haitong Securities Co.

China's securities regulator unveiled the QDII scheme in April 2006, giving access to mainland investors to overseas capital markets. But most QDII providers still keep operations on the mainland or employ overseas firms to operate the funds, which reduced the effectiveness of the fund management.

Meanwhile, China's plunging stock market also diverted some investors' attention to seek other opportunities.

China's benchmark indices in Shanghai and Shenzhen have lost more than 50 percent since October, making markets here the second-worst performer in Asia this year.