BlackRock Inc. (NYSE: BLK) has plenty of reasons to celebrate as the global investment firm giant was granted approval to start selling products Chinese individuals, The Wall Street Journal reported.
Milestone achievement
The China Securities Regulatory Commission confirmed the New York City-based BlackRock can establish its own wholly-owned mutual fund business based in Shanghai, China, according to WSJ. The milestone implies BlackRock is among the select few in the world that can manage assets for Chinese citizens.
China’s willingness to open up to foreign asset managers only started in 2020 when it scrapped laws preventing foreign asset managers to even apply for a mutual-fund license.
BlackRock’s exposure to China dates back more than 10 years and it has been selling private funds to high net-worth individuals since 2018. But it isn’t until now the company can independently access “mom and pop investors.”
The new exposure to China could be seen as continued momentum after the company’s strong second quarter earnings report in July.
What opportunity BlackRock faces
Needless to say, BlackRock faces a massive opportunity in China given its status as the world’s second-largest economy, WSJ noted. BlackRock will now compete against Chinese asset managers who face minimal outside competition in managing an estimated 90 trillion yuan (around $13 trillion) worth of assets by 2023, per consulting firm Oliver Wyman.
Today there are more than 140 Chinese mutual fund managers that combine to manage 17 trillion yuan worth of assets, according to the Asset Management Association of China.
Challenges ahead
BlackRock’s new exposure to China in no means it will steal market share away from a Chinese firm. At the most basic level, BlackRock will
