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Fidelity becomes first to clear final regulatory hurdles for local operations in China

Fidelity Investments
Assets: $494,298

Fidelity International has become the first global asset manager in China to clear the final regulatory hurdle to creating onshore investment products for local institutional and high-net-worth investors.

Fidelity said in a news release Wednesday that its wholly foreign-owned enterprise, established in Shanghai in September 2015, had successfully registered as a “private fund management company” with the government-backed Asset Management Association of China.

Mark Talbot, managing director, Asia Pacific at Fidelity International, called the AMAC qualification “a significant milestone” for the firm’s push into China, the news release said.

A handful of other foreign managers, including Aberdeen Asset Management and J.P. Morgan Asset Management (JPM), have likewise established WFOEs for investment management operations but have yet to register with AMAC.

Daisy Ho, the firm’s Hong Kong-based managing director, Asia Pacific ex-Japan, said in a telephone interview that under current regulations, Fidelity International now has six months to build out its local investment and operations teams in Shanghai and bring its first investment product to market.

Ms. Ho declined to say what her firm’s first product will be.

Peter Alexander, managing director of Shanghai-based financial markets consulting firm Z-Ben Advisors, said in an e-mail that AMAC registration allows Fidelity’s WFOE to offer local products and raise funds from Chinese institutional and high-net-worth investors, but a bigger prize could come in three years when, under current rules, the firm can apply for a full license to manage retail money as well.

Mr. Alexander noted that the first local private fund management company has applied for and received its retail license, and another eight have already applied. Private fund management companies until now were restricted to managing institutional and high-net-worth investors.