JP Morgan aims to be biggest player in fund management market
JP Morgan Asset Management has carved a niche for itself as one of the leading overseas fund houses in town, but chairman Paul Bateman has his sights set on the firm becoming one of Hong Kong's largest houses overall.
The firm has been beefing up its presence over the past several years, expanding headcount from about 330 in 2005 to more than 500 this year and growing by 50 per cent in the Asia-Pacific region to an overall employee figure of 1,500. And it plans to continue adding staff throughout the region.
'When you look forward 20 years, JP Morgan in Asia has to be as big relative to all the Asian houses as it is relative to the European houses and US houses today,' Bateman (pictured) said in an exclusive interview with the South China Morning Post.
'That's a very, very big thing we have to achieve.'
Overseas fund managers have traditionally focused their attention on developed markets like the United States and Europe where the most demand exists for long-term investment planning. Many have since shifted resources to Asia, however, where economic growth looks brightest in an otherwise dreary global economy.
The influx of new players and increased scale of old ones has ramped up competition in Hong Kong. The number of unit trusts and mutual funds authorised by the Securities and Futures Commission has increased over the past decade by 22 per cent to 1,968.
JP Morgan Asset Management is no stranger to vying for market share in Hong Kong, having officially set up shop in 1974. Since then, it has tried to stand out from the crowd by growing from within the region and forging local connections. 'We don't seek to run the business from London or New York,' Bateman (pictured) said. 'We seek to run the business with power and authority delegated to people in the region who are career-committed to the region.' For example, he noted that the firm had seeded its mainland business with Chinese speakers from its Taiwan operations.
They were tasked with co-ordinating with regulators and businesses to lay the groundwork for the firm's joint venture with Shanghai International Trust and Investment.
Bateman said growth in the mainland market had come in ahead of schedule and the joint venture had already made a significant contribution to the firm's overall revenue, without specifying how much.
It had US$8.6 billion assets under management in October this year, compared with just US$300 million at the end of 2005.
'What was always a possibility became a reality,' Bateman said. 'And you have to believe that over a period of time the mutual fund business in China will be as big as the business in America and in Europe.'
He expected there would still be growing pains, however, given the rapid pace of wealth creation across the border. 'It's a market that has a very short-term mindset,' Bateman said. 'Providing investor education in a way which informs people about the risks they are taking and encourages them to take the longer term view, when that is not their natural inclination, is a huge challenge.'
Mainland investors have struggled to adapt to long-term investing in part because of the up-and-down nature of domestic markets.
The Shanghai Composite Index has been one of the world's most volatile equity benchmarks, with fluctuations of at least 60 per cent each year since 2006. It is the Asia-Pacific's second-worst performing benchmark so far this year.