Updated January 2nd, 2024 at 13:16 IST

Alliance Bernstein's China mutual fund foray staring on industry challenges

Industry sustained losses for the third consecutive year, adding to headwinds of domestic and foreign players.

Reported by: Business Desk
China | Image:Freepik
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US-based AllianceBernstein Holding LP,  has acquired a licence to operate its wholly-owned mutual fund business in China, marking its entry into the country's vast $3.8 trillion mutual fund market. 

The company's move reflects the growing trend of global asset managers seeking opportunities within China's investment landscape.In a statement shared on its WeChat account, AllianceBernstein expressed its intention to provide Chinese investors with onshore investment products and solutions, aiming to facilitate their exploration of opportunities within China's domestic market. 

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China initiated the removal of foreign ownership restrictions within its mutual fund industry in 2020, allowing global entities such as BlackRock, Fidelity International Ltd, and Neuberger Berman Group to secure approvals for wholly-owned mutual fund operations in the country. 

Notably, Morgan Stanley and JPMorgan Chase & Co. also obtained complete control over their mutual fund joint ventures in the previous year.Despite the allure of China's mutual fund market, challenges persist. The industry sustained losses for the third consecutive year in 2023, contributing to headwinds faced by both domestic and foreign players. 

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Beyond market dynamics, foreign entrants are navigating intricate issues such as China's stringent data security regulations and geopolitical uncertainties. Last year, American investment manager Van Eck abandoned its plans to establish a Chinese mutual fund unit despite securing approval, citing uncertainties within the business landscape. 

This withdrawal underscores the complexities faced by international firms seeking to establish a foothold in China's intricate financial market.Alliance Bernstein's entry into China's mutual fund industry reflects a strategic effort to tap into the immense potential of the country's investment landscape while confronting the challenges inherent in the market's evolving dynamics and regulatory environment.

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(with Reuters inputs)

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Published January 2nd, 2024 at 13:16 IST