Hang Seng Bank opens Qianhai venture to sell mutual funds to 1.3 billion people

PUBLISHED : Thursday, 08 September, 2016, 12:03pm
UPDATED : Thursday, 08 September, 2016, 10:59pm

Hang Seng Bank, a unit of HSBC, has opened a mutual fund in Shenzhen’s Qianhai financial district, becoming the first foreign company to respond to a government programme to rebrand the southern Chinese city as a hub for modern services.

Hang Seng will invest 70 per cent of the Hang Seng Qianhai Fund Management Co., with a registered capital of 200 million yuan (HK$233 million). Qianhai Financial Holding Co., the financial arm of the Qianhai city’s regulator owns the remaining 30 per cent.

“This is a milestone of how a Hong Kong fund house, through co-operation with Qianhai authority’s commercial arm, could sell fund products to 1.3 billion population of the whole the country,” Hang Seng’s executive director Andrew Fung said in an interview with the South China Morning Post.

The venture will be applying for permission from the China Securities Regulatory Commission to sell a mutual fund product comprising a mixture of mainland bond and A-shares investment funds.

“I would like to see the fund launched within six months upon getting approval from the CSRC,” Fung said.

Under the license requirement, the venture can market approved products across the whole of China from its basein the special economic zone in Qianhai, an hour’s drive from Hong Kong.

None of Hang Seng Bank’s existing fund products are authorised for distribution in China via the venture, Fung said. He added that the venture could provide advisory research services on A-shares to Hang Seng Bank .

Fung saidthat the senior management of the venture would be headed by Hong Kongers.

Li Qiang will take up the role of chairman, while Arthur Liu will become general manager while Fu Yu will has been designated chief inspection officer. Fung will take a board seat, while three independent directors are from Hong Kong.

About half of the 40 personnel employed by the venture will be from Hong Kong, Fung said.

“Hang Seng Qianhai is the first venture that allows majority ownership by foreign investors,” the fund manager’s chairman Li said. This makes it easier to import international management and best practises into the venture, he said.

“Hang Seng is one of the largest funds in Hong Kong, with international talent in asset management, product development and risk management,” Li said. “We hope this venture will import Hong Kong talent and management experience to Qianhai.”

Rose Lee, chief executive of Hang Seng Bank, said the venture is a major developement for Hang Seng in the Pearl Delta River area.

“The joint venture will also help promote innovation in the financial industry on the mainland,” Lee said at the opening ceremony in Qianhai on Thursday morning.

She said the venture will sell fund products and asset management services to mainland individual and institutional investors.

Fung said the venturewill promote fund products via Hang Seng Bank’s mainland branch network across 20 mainland cities.

Hang Seng is the only sino-foreign majority owned mutual fund house in Qianhai and in China. The Bank of East Asia joint venture is not a fund house but a securities firm while BEA own minority stake.