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SCMP Reporter

Lloyd George Management, which claims to be Hong Kong's largest independent fund management company, has opened up a vast new avenue of potential business - Japan.

 The company, which is 67 per cent held by its founding partners, sold a 5 per cent stake to Sumitomo Life Insurance in November.

 Japan's third-largest life insurer, which had a US$200 billion investment portfolio, had already placed $100 million under Lloyd George Management's care, said chairman and chief executive Robert Lloyd George.

 'I'm proud to say that Sumitomo Life Insurance, which is the most dynamic and internationally oriented of the Japanese life insurance groups, has taken a 5 per cent stake in us,' said Mr Lloyd George.

 The timing looked good as Japan's Big Bang financial reforms eased the way for the country's huge pool of savings to be invested abroad, he said.

 'Japanese investors will increasingly be oriented towards Asian equities and possibly Asian bonds. I think that will be an important source of new assets for us,' Mr Lloyd George said.

 The move is in line with a policy of selling small stakes in the company to cement alliances with fund distributors in key markets abroad.

 It has helped Lloyd George Management gather an impressive $2.6 billion under management since it was founded in late 1991.

 Boston-based Eaton Vance, which has $40 billion under management, holds 20 per cent of Lloyd George Management, while two banks, Germany's Sal Oppenheim and Switzerland's Mirabaud, and Canadian money manager Trimark also have minor holdings.

 'That has been one of the most important pillars of our growth, that policy of partnering brings us access to large markets of investors,' said Mr Lloyd George, who is the great grandson of the British statesman David Lloyd George.

 Last month, he saw further evidence that the investment tide was turning back Asia's way when he raised GBP10 million (about HK$125.22 million) in the launch week in London of the LG Eastern Opportunities Fund, the company's first British-registered open-ended vehicle.

 'Last year it would have been difficult to sell but the mood has definitely changed and people are looking again at Asia with an average growth rate outside Japan of probably 7 per cent,' said Mr Lloyd George.

 'The potential for earnings growth is so much higher than Europe, which is still stumbling along at 2 or 3 per cent [GDP growth].'  Mr Lloyd George, whose company uses the family's dragon crest as a logo, is very bullish on the prospects for the year of the dragon.

 'This year reminds me of the 1992-93 trend. The first year [1992] we just started to see the markets take off with local buying then the following year all the markets went through the roof as foreigners rushed in.'  The former managing director of Indosuez Asia Investment Services in Hong Kong believed that mainland companies had made big strides as investment vehicles, opening the way for China to enjoy much greater inflows of portfolio capital.

 'The quality of Chinese-listed companies has improved beyond all recognition since the first group that listed in 1992,' said Mr Lloyd George.

 'If you fast forward by eight years, you have got things like China Telecom, which every major pension fund in America and Europe will have to own.

 'I think that is how China is reaching maturity as a capital market.'  The next step would be to fully open up the Shanghai and Shenzhen exchanges to foreign investors as part of the reforms brought about by the mainland's entry to the World Trade Organisation, Mr Lloyd George said.

 'I'm very optimistic about what's happening but you have to take the long view. It won't happen overnight and we've had a lot of bumps and we obviously will have some more,' he said.

Jon Ogden 



New frontiers for Lloyd George