Now, here’s the solution to all of China’s financial markets problems: hedge funds.
On Thursday, the China Securities Regulatory Commission (CSRC) said on its website that it will let the Asset Management Association of China (AMAC) detail the rules to allow foreign hedge fund managers to launch products in the country.
The nation’s securities regulator said allowing hedge funds will liberalize and deepen the domestic capital markets by diversifying the pool of investors, bringing in new asset management talent and deepen deregulation of the capital markets. This is part of the commitment the CSRC made during the US-China Strategic and Economic Dialogue in 2015.
Foreign asset managers launching products in China must set up operations locally, raise capital locally, and invest in the domestic capital markets, without conducting cross-border transactions, the regulator said.
Bridgewater Associates, the world’s largest hedge fund, as well as other, have already set up units in China. But none can launch funds there without registering with China’s fund association.
In the mutual fund space, foreign asset managers have long been granted access, but they must set up joint ventures with local firms.