The asset management arm of HSBC, the world's third-largest bank by market valuation, will set up a mainland fund management joint venture with Shanxi Trust and Investment. The deal will further expand the scope of HSBC's already substantial investments in China's financial industry. The two sides had in principle agreed on the joint venture, the British-based bank said yesterday. 'Completion of the transaction is subject to final documentation and various conditions including obtaining regulatory and other approvals,' it said. Blair Pickerell, Asia-Pacific chief executive of HSBC Asset Management, will travel to Shanxi to sign the deal next Wednesday. Although HSBC declined to give further details, a Shanxi Trust spokeswoman said her firm and HSBC would be the joint venture's only investors. A joint venture with foreign equity interest capped at 33 per cent is the only vehicle through which foreign investors can access the nascent but ballooning fund industry. That ceiling will be raised to 49 per cent by December, however. A fund executive said the choice of a relatively small trust firm as its partner helped put HSBC in the driver's seat of the joint venture. 'It is easier to negotiate with a small firm and secure management control in the future,' he said, adding Shanxi Trust had 'managed to steer clear of any trouble in China's scandal-prone trust industry'.