BlackRock received the license in June 2021 as the first foreign financial institution to operate a wholly owned China subsidiary, BlackRock Fund Management.
Blackrock’s July 1 application with the China Securities Regulatory Commission (CSRC) to launch the BlackRock China New Horizon Mixed Securities Investment Fund, the first wholly foreign-owned mutual fund, marks a turning point in China’s financial market reform: Foreign financial institutions are no longer required to have a Chinese partner.
BlackRock received the license in June 2021 as the first foreign financial institution to operate a wholly owned China subsidiary, BlackRock Fund Management. A booming Chinese mutual fund market will attract more foreign-owned mutual fund products, with two leading global institutions, JPMorgan Chase and Morgan Stanley—both of which have joint ventures with long histories—recently announced their plans to buy out their Chinese partners.
The Chinese mutual fund market experienced tremendous growth in 2020, with net asset value growing by 5.1 trillion renminbi ($788 billion), or 34.5% since 2019, to RMB22.9 trillion—from just RMB13 trillion in 2018. Due to the increasing interest in long-term investing and rising confidence in professionally managed investment products in China, the number of investors in mutual funds also showed strong growth in 2020. A survey conducted by China’s Shenzhen Stock Exchange of 27,667 retail investors from 342 Chinese cities shows 67.1% bought mutual fund products in 2020, up 21.3% from the prior year.
In liberalizing financial markets, Chinese authorities hope to further encourage foreign investment in RMB-denominated assets and accelerate the yuan’s internationalization progress, as well as stimulate the development of domestic funds with fresh competition.