Morgan Stanley is broadening its footprint in China after becoming the latest foreign financial institution to obtain regulatory approval to take full control of its mutual funds joint venture in the country.
Morgan Stanley Investment Management has received the green light from the China Securities Regulatory Commission (CSRC) to increase its stake in Morgan Stanley Huaxin Funds from 49% to 100%. The equity step-up is subject to business registration and other procedures required by Chinese regulators.
“Wholly owning our China mutual funds business will allow us to more fully serve this dynamic asset and wealth management market and adds a significant pillar of growth to our global investment management franchise,” says Dan Simkowitz, head of investment management at Morgan Stanley.
“As we further invest in our onshore platform, we will bring over our four decades of industry experience and global research expertise in sustainability and diversified portfolio management to help domestic clients achieve their investment goals.”
Last month J.P. Morgan and Standard Chartered also won regulatory nod to expand their operations in China. Similar approvals were granted recently to Schroders, Manulife Financial, Fidelity International, and Neuberger Berman, almost three years after China announced the scrapping of foreign ownership limits on the country’s securities and fund management sectors.
Gokul Laroia, chief executive officer of Asia at Morgan Stanley, says: “The firm has been active in China for almost three decades and we are committed to our goal of building a fully integrated financial services firm to meet the evolving needs of domestic and global clients. Today’s announcement is an important strategic milestone along this path.
“With high levels of wealth creation, growing demand for financial advice, and with the launch of a private pension scheme, we see long-term opportunities in China’s asset management industry,” Laroia adds.
Headquartered in Shenzhen, Morgan Stanley Huaxin Funds became a joint venture in June 2008. The company provides diversified investment management services to retail and institutional clients through mutual funds and segregated management accounts, including fixed income, active equity, quantitative equity, and multi-asset investment.
Morgan Stanley Investment Management, together with its investment advisory affiliates, has more than US$1.3 trillion in assets under management or supervision as of December 31 2022.