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BlackRock Forays Into Mutual-Fund Business In China: WSJ

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BlackRock Forays Into Mutual-Fund Business In China: WSJ

What Happened: BlackRock Inc. (NYSE: BLK), the New York-based asset management firm gets the nod from the regulators to initiate its mutual-fund business operations in China, WSJ reported.

Chinese Banking and Insurance Regulatory Commission (CBIRC) approved the joint application of Blackrock and Neuberger Berman to manage and sell mutual funds in China.

Why It’s Important: This is a watershed moment for the investment industry as BlackRock becomes one of the first overseas investment companies to kick-start their operations in China.

China is gradually opening up its financial sector to foreign institutions and BlackRock’s approval goes a long way in that direction. A large number of overseas investment firms have long sought to explore the huge pool of Chinese investors. Last December, JPMorgan Chase (NYSE: JPM) too got approval from regulators to set up major ventures in China.

An elated spokesperson from BlackRock said that the company intends to provide differentiated solutions to the Chinese investors in order to assist them in realizing their long-term financial goals.

BlackRock had a decade long presence in China, however, with the current approval they can now directly deal with Chinese investors without forming any kind of partnerships with the local firms. Both Neuberger and BlackRock have already set up their enterprises in China but there were certain restrictions in reaching out to the general investors prior to the current approval.

What Next: Experts believe that Chinese asset managers are expected to manage about $13 trillion worth of assets by 2023. Therefore, large corporations like BlackRock are keen to explore the Chinese market. Laurence D. Fink, CEO of BlackRock, in a letter to the investors earlier this year, said, he was hopeful about the new venture and thinks China would be one of the biggest opportunities for the company in long-run.

 

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