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Credit Suisse Targets China's Private Funds Sector

Tom Burroughes, Group Editor , 21 December 2018

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The banking group wants to widen its client base and deepen involvement in this expanding investment market.

A Credit Suisse joint venture in China has launched an equity trading service geared for private securities investments funds, part of the JV's move to bolster onshore brokerage in the Asian country.

The JV is called Credit Suisse Founder Securities Limited.

Via its newly-launched asset management brokerage trading terminal, the JV is widening its client base by offering trading and execution services to certain domestic private securities investment funds (including hedge funds), in addition to the public mutual funds and qualified foreign institutional investors (QFIIs) and renminbi qualified foreign institutional investor (RQFIIs).

“China’s private fund industry has experienced robust growth as the regulatory environment continues to evolve,” Neil Hosie, head of equities for Asia-Pacific at Credit Suisse, said.

The Swiss bank and its JV intend to “significantly” boost office space to keep up with demand, Hosie said.

CSFS launched domestic brokerage services in November 2016.

Despite recent upheavals in the Chinese financial markets, China’s private securities investment fund industry has maintained steady growth and recorded growth of around 5 per cent in the nine months through to September 2018, reaching RMB2.4 trillion ($348 billion) in total assets under management (AuM) from more than 35,000 registered private securities investment funds (source:  Asset Management Association of China).

Recent developments have boosted demand for Chinese securities. MSCI, the benchmarking and index provider, announced in September that it may raise the weighting of mainland China’s A-shares from the current 5 per cent to 20 per cent, taking place in phases. 

“This indicates that international fund flows into the A-share market are expected to increase substantially in the future. As China continues to liberalize the domestic financial markets, an increasing number of global asset managers are also setti ng up operations in China,” Credit Suisse said.

Credit Suisse’s main domestic rival, Zurich-listed UBS, said in late November that it had been approved by Chinese regulators to boost its stake in its securities joint ventures in China, UBS Securities Co Ltd, from 24.99 per cent to 51 per cent. 

(Editor's comment: The move is part of how the bank, it seems, can sow HNW clients can access to a range of markets in Asia. The potential big weighting rise by MSCI to China's A-share markets, and other market changes, puts a premium on getting fast access to these sectors. Private banking clients of the kind served by Credit Suisse and its peers will expect best-in-class access. This move appears to be part of that process.)

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