BlackRock’s BLK efforts to expand operations in attractive China-based markets have started bearing fruits. The company has received approval from the China Securities Regulatory Commission to set up a mutual fund unit in the country.
Thus, BlackRock has become the first global asset manager to get consent to kick start operations in China. The company has six months to establish a wholly-owned subsidiary in Shanghai, which will have registered capital of CNY 300 million ($43.7 million).
BlackRock already has a mutual fund joint venture (JV) with Bank of China. Nonetheless, with the current development, the company will be able to offer differentiated solutions to investors in China, in addition to managing and selling mutual funds in the mainland.
This development comes on the heels of the company getting regulatory nod to form a majority-owned wealth management JV in China. The CBIRC approved a wealth management JV among BlackRock, Singapore state investor Temasek Holdings Pte Ltd and China Construction Bank Corp. last week.
China continues to be one of the company’s top regions for growth. As the country is further opening up the financial sector for foreign companies, BlackRock wants to take advantage of this and expand therein.
BlackRock CEO Larry Fink, in his annual letter to shareholders, stated, “I continue to firmly believe China will be one of the biggest opportunities for BlackRock over the long term, both for asset managers and investors, despite the uncertainty and decoupling of global systems we’re seeing today.”
Over the past few years, the company has made several strategic acquisitions — domestic and overseas — that have aided top-line growth. Moreover, its strong global presence, broad product diversification, revenue mix and steadily improving assets under management are expected to aid revenues.
In addition to BlackRock, various other global finance companies are seeking to expand operations in China as the country is removing foreign ownership limits on financial firms. Some of the firms already taking advantage of the available options therein include Vanguard Group Inc., JPMorgan JPM, Goldman Sachs GS, UBS Group, HSBC Holdings and Morgan Stanley MS.
Shares of BlackRock have gained 23.2% over the past six months, significantly outperforming 3% rise recorded by the industry.
Currently, BlackRock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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