Rosy future for asset management
China is expected to maintain steady economic growth next year and that will provide a golden opportunity for ABN AMRO to further increase its asset management business in the Chinese market, says Han de Jong, senior vice-president of the company.
"China's overheating economy in some fields does not mean it needs a hard landing or a soft landing, for it has not hindered overall economic growth," de Jong said in an interview.
"China has great space to develop its economy in other spheres and there is no need at all to cool down its economy."
On the basis of China's sound economic development, it is possible that ABN AMRO Asset Management could collect more funds from the nation's market, said Arne Lindman, chief executive officer of ABN AMRO Asset Management Asia Pacific.
"China is a very important part of our market in the Asia Pacific region. We need to increase investment in it," Lindman said.
He said the first thing the company will do is to increase its shares in its joint venture in China from the current 33 per cent to 49 per cent.
ABN AMRO launched its joint venture with Xiangcai Securities in September last year with a registered capital of 100 million yuan (US$12 million).
ABN AMRO took up a 33 per cent stake in the ABN AMRO Xiangcai Fund Management Company Ltd, while Xiangcai took the remainder.
The share increase means that ABN AMRO will invest a sum purchasing the 16 per cent stake from Xiangcai Securities.
"But the specific sum is hard to figure out. It will be decided by negotiating with our Chinese partner after the application is approved by the China Securities Regulatory Commission," said Frances Chang, chief executive officer of ABN AMRO Asset Management (Asia) Ltd China.
The venture manages funds of 3.5 billion yuan (US$424 million), collected from Chinese individuals through banks, the stocks market and institutions such as banks and insurance companies.
"All the funds have been put into the market, and it is going on well," said Chang.
Michael Lu, vice-president of ABN AMRO Asset Management (Asia) Ltd, said as China loosens its policy, the company plans to issue one to two funds in China yearly to collect more capital.
His words were echoed by Lindman who said if the Chinese market opens up wider, the company will be able to help more Chinese enterprises go outside the Chinese market. And vice versa with more foreign investors coming to find new investment opportunities in China.
"But the opening up should go step by step, not too fast, otherwise, it will cause instability in the capital market," he said.
Lindman said ABN AMRO will not consider launching a second asset management joint venture in China. But the group company may possibly launch a futures trading joint venture in the country by co-operating with its Chinese partners. He did not reveal details.
"China is a very strong equity capital market that is expected to have an input of large capital as the fund business extends into its social securities and pension markets," he said.
To date, 38 fund companies have issued funds valued at a combined 200 billion yuan (US$24.2 billion) on the China market.
"If the policy allows insurance companies to invest in the fund market, we will have a very good chance to expand business," Lindman said.
"But fierce competition will come just as the overseas markets face," he said.