The state majority-owned fund manager is seeking a partner in the U.S. to roll out funds catering to American retail investors despite the likelihood of increasing tensions between Washington and Beijing, said CEO Li Yimei.
China Asset Management (ChinaAMC), which manages $350 billion, is also awaiting Beijing’s approval to launch a cross-listing exchange-traded fund (ETF) in Brazil, she said, adding the planned launches would be the first of their kind in both countries.
“If the mountain will not come to us, then we will go to the mountain,” Li said in an interview this week.
The moves overseas illustrate Chinese fund managers’ efforts to expand their investor pool to draw back global participants who pared their exposure to China in the past two years on concerns over its slowing economy.
While it’s “almost certain” there will be more challenges and frictions between the U.S. and China as Donald Trump returns to the White House, Chinese assets may rebound as Beijing will provide sufficient economic stimulus to counter their impact.
“I believe they (foreign investors) will come back to China assets,” she said.
While some US investors may have doubts about products from a Chinese fund manager, Li pointed out others may have different thoughts and “It would be great for us to fulfill the demand of those who don’t.”
International investors and mainland institutions flocked to products managed by ChinaAMC’s Hong Kong unit last year, with assets under management doubling to exceed HK$100 billion ($12.84 billion).
While investors from North America face more restrictions in investing in China, Li said she is confident in gaining new flows from the Middle East, Latin American, and South East Asian investors.
Last year, Qatar’s sovereign wealth fund agreed to buy a 10% stake in ChinaAMC, making it the first in China to have a Middle Eastern shareholder.
In December, ChinaAMC formed a partnership with Oman’s Jabal Asset Management and introduced a China equity long-only fund in the country, which Li said is the first such strategy managed by a Chinese asset manager in Oman.
Beijing is in talks to launch an ETF cross-listing program with Brazil, under which ChinaAMC and a couple of other fund managers would offer China-focused products, Li said, following Chinese President Xi Jinping’s November visit to Brasília.
However, at home, Chinese asset managers are reeling from lower margins due to squeezed fees as institutional flows become more dominant.
Investors backed by Chinese government funds, dubbed “national teams”, have been pumping money into the stock market via the biggest ETFs, with ChinaAMC, the country’s largest ETF manager with 650 billion yuan worth of assets, among the ones receiving the most flows.
“National teams entered at market lows to boost sentiment and it shows the government’s long-term confidence,” Li said.
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