Fidelity International has successfully secured 5 billion yuan ($700 million) from investors in China for its debut fixed income mutual fund, further solidifying its presence in the country’s mutual fund market, which is valued at $3.8 trillion. The asset manager is making efforts to convince Chinese regulators to relax strict data security regulations that currently inhibit cross-border sharing of research. This would enable Fidelity to fully leverage its expanding capabilities in the Chinese market.
The bond fund, Fidelity’s second mutual fund offering in China, garnered significant interest from institutional investors during a three-week subscription period. Helen Huang, the Managing Director of Fidelity China, expressed her encouragement at the fundraising size, considering the fierce competition in the local market and Fidelity’s relatively limited track record in China.
China’s mutual fund industry boasts over 150 participants, including notable foreign firms like BlackRock, Schroders, and JPMorgan Asset Management. Despite the stiff competition, Fidelity International’s successful fundraising highlights the growing demand for mutual funds in China.
Fidelity International plans to diversify its product lines in China and leverage its global expertise in pension management and sustainability investing. However, the current data security regulations in China pose a significant obstacle. Fidelity is unable to fully capitalize on its research capabilities within the country due to restrictions on the export of sensitive information. Fidelity proposes that regulators allow the sharing of research findings within the group, a move that would contribute to greater collaboration and knowledge sharing in the financial industry.
Industry groups, including ASIFMA, have also advocated for the relaxation of data sharing restrictions in China, emphasizing the importance of cross-border information exchange for financial firms. Huang stated that regulators are actively discussing the matter, inspiring optimism for potential changes in the future.
While Fidelity is eager to expand its business in China, Huang stressed the importance of patience. The asset manager intends to establish the necessary groundwork for multi-asset allocation strategies, secure licenses for offshore investments by Chinese investors, and explore opportunities in the country’s pension market.
The China Securities Regulatory Commission, which oversees the asset management industry in China, has not yet provided a response to queries regarding potential regulatory changes.
FAQ:
Q: How much money did Fidelity International raise for its first fixed income mutual fund in China?
A: Fidelity International raised 5 billion yuan ($700 million) for its debut fixed income mutual fund in China.
Q: What is Fidelity International lobbying for in China?
A: Fidelity International is lobbying Chinese regulators to relax stringent data security rules to enable cross-border sharing of research.
Q: How is Fidelity International planning to broaden its presence in China?
A: Fidelity International aims to expand its product lines in China and utilize its global expertise in pension management and sustainability investing.
Q: Why is Fidelity unable to fully exploit its capabilities in China?
A: China’s data security rules restrict the export of research data and reports generated by Fidelity in China.
Q: Is there optimism for regulatory changes in China?
A: Fidelity is optimistic that regulators are considering possible changes to allow greater information sharing.
Q: What are Fidelity’s priorities in China?
A: Fidelity is focusing on establishing a strong foundation in China, including multi-asset allocation strategies, offshore investment licenses, and opportunities in the pension market.