China Licence Grants to Foreign Fund Managers Hit New Low

Only four non-Chinese private fund managers successfully registered as a wholly foreign-owned enterprise with Beijing regulators last year, according to private fund data provider Simuwang.com.

This is the lowest number since foreign firms were first allowed to start such businesses in 2016. The 2021 figure compares with the high of nine granted in 2020 and seven in 2019.

There are now 35 wholly foreign-owned private fund management companies in China. Almost all are based in Shanghai.

“The slowdown is not an issue only for foreign-owned private fund managers,” Zhuang Yingdong, a portfolio manager at Cheese Fund Management, a private securities fund, told China Business Journal.

“Local firms and their products also had a hard time last year crossing the finishing line as regulators tightened the screws on the industry,” Zhuang said.

Regulators have warned local hedge funds against charging performance fees for excess returns even if fund investors suffer net losses after all fees.

Despite the slowdown, existing foreign groups applied to launch a new high of 74 funds last year, a 220% jump from 2020.

Winton Capital, UBS Asset Management, Bridgewater Associates, Value Partners Group and Cephei Capital Five have each rolled out more than 10 products.

Bridgewater’s Shanghai-based private fund manager became the first in China to have over 10 billion yuan (US$1.57 billion) in assets.

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.