BlackRock gears up for mainland China sales
BlackRock, the world's largest asset-management company, will expand its team in Hong Kong and introduce more locally domiciled funds to take advantage of a soon-to-be-signed mutual recognition agreement between Hong Kong and the mainland that will allow the cross-selling of fund products.
Mark McCombe, BlackRock's Asia-Pacific chairman, said the agreement would help Hong Kong become a fund hub but warned that it would take time for the business to be built up.
"Mainland Chinese investors would be interested in buying overseas fund products but that does not mean the mutual recognition scheme would be a success overnight," McCombe said in an interview with the South China Morning Post.
Capital controls have prevented international funds from being sold on the mainland and mainland funds from being sold in Hong Kong. However, under a mutual recognition agreement to be signed between the mainland and Hong Kong soon, funds domiciled in the city with fund managers licensed by the Securities and Futures Commission will be allowed to sell their products on the mainland. Likewise, mainland fund products will be allowed to be sold in Hong Kong.
Local fund industry players believe the agreement will be signed before Christmas.
McCombe said that while most of his company's funds were domiciled in Dublin or Luxembourg, the company had more than 10 funds domiciled in Hong Kong that would qualify to be sold on the mainland under the scheme. He plans to hire more fund managers locally so that they can sell products on the mainland.
He said mainland investors would not rush to buy overseas fund products as they would need to look into the track records of the fund companies and their products. In addition, international fund companies would need to establish sales networks and build their brands on the mainland.
BlackRock has a joint-venture fund company on the mainland that would be a sales channel and McCombe said it would also explore other mainland partnerships through which to sell.
McCombe, a member of the Hong Kong government's Financial Services Development Council, said mutual recognition would be an important step forward in promoting the city as a fund hub like Luxembourg or Dublin.
"Hong Kong has stable rules and regulation as well as good financial infrastructure," he said. "The mutual recognition agreement is going to help Hong Kong to capture the opportunity to be a hub of funds."