Bullish Invesco keeps China faith
The firm and its mainland partner say long-term focus is set for the new fund
United States fund house Invesco and joint-venture partner Great Wall Securities have brushed aside concerns over weak market sentiment and will soon launch a US$200 million to $300 million fund for mainland investors.
'Invesco is planning to invest in China for the long term. We are investing from the point of view of 20 to 30 years. We are not that concerned about the current short-term volatility of the securities market,' Invesco Group chairman Michael Benson said.
The joint venture, Invesco Great Wall Fund Management Company, last year launched a US$220 million fund, which has several sub-funds investing in bonds and securities, as well as a balance fund that invests 60 per cent in bonds and 40 per cent in equity.
The new fund will invest in consumer-related stocks in China and will be sold through branches of the Agricultural Bank of China.
Invesco Asia-Pacific chief executive Andrew Lo said the company was not worried about the impact of China's macroeconomic measures as it attempted to cool down the overheating economy.
Under China's World Trade Organisation obligations, foreign fund houses from December will be allowed to hold 49 per cent of a mainland fund house, instead of the present 33 per cent.
Once the restriction was lifted, Invesco and Shenzhen-based Great Wall Securities would increase their holdings in the joint venture to 49 per cent from 33 per cent now, Mr Lo said. They will buy their stakes from the venture's other two shareholders, Kailuan Group and Dalian Shide Group.
Mr Lo refused to disclose the price.
After the purchase, Kailuan and Dalian Shide would have their holdings reduced from 17 per cent to 1 per cent.
Mr Lo said the fund house would also consider providing discretionary investment services for mainland firms if China allowed foreign fund houses to become involved in this type of business under the Securities Investment Funds Law, to be implemented on July 1.
Details of the law have not been disclosed, but many fund managers believe it will allow fund houses to provide investment services to mainland companies. It could also waive the requirement that all investment funds should allocate 20 per cent of a fund's assets in government treasuries or other cash equivalent.
Mr Lo declined to comment on whether the company had been affected by the actions of HSBC and Standard Chartered Bank, which have suspended sales of Invesco fund products since February, pending the outcome of litigation against a US unit of its parent.
Mr Benson said the firm was negotiating with the US Securities and Exchange Commission for settlement and hoped a result could be achieved in about six weeks.
The suits accuse Invesco of deceiving investors and failing to protect them from market timing abuses.
