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China's US$100 billion E Fund plans offices in New York, London

JUN 19, 20153:05 PM

[BEIJING] E Fund Management Co plans to open offices in New York and London as it seeks to build its brand and promote products overseas.

The Guangzhou-based fund-management company, which oversees US$100 billion, is seeking to open an office in New York "very soon" and another in London, Sau Kwan, the company's president, said in an interview Thursday. The offices will focus on promoting E Fund's brand and will offer its core fixed-income and equity products, she said.

"Going global is a definite trend for major Chinese fund management companies, as there are many opportunities overseas and foreign investors are interested in yuan assets," said Mr Kwan, who joined E Fund in 2014 after serving as a senior vice president for Greater China at Boston-based State Street Bank & Trust Co. "This is a vital stepping stone for our growth."

China is opening its financial markets to the world as it seeks to discourage outflows and obtain reserve status for the yuan. The Shanghai Composite Index has jumped 42 per cent this year, the best performance among major benchmark stock indexes, and local-currency sovereign bonds rank second in Asia. The People's Bank of China cut the amount of cash lenders need to set aside as reserves twice this year and reduced its benchmark one-year lending rate three times since November.

E Fund's Hong Kong branch had 27.2 billion yuan (S$5.85 billion) of quotas in the Renminbi Qualified Foreign Institutional Investor program as of last month, which allows yuan raised offshore to be used to buy bonds and equities on the mainland. The firm also has US$276 million of quotas under the Qualified Foreign Institutional Investor program, which permits foreign currency to be used for investments in China's onshore markets.

The company is preparing to apply for regulatory approval in China and the US, said Mr Kwan. It will consider whether to apply for QFII and RQFII quotas for its overseas branches after the subsidiaries are opened, she said. The company currently has offices in Guangzhou, Beijing, Shanghai and Hong Kong.

"We want to expand out of Asia," said Mr Kwan. "New York and London are very important financial centers. Our layout will be quite complete if we have offices in Asia, the US and Europe."

BLOOMBERG