BlackRock enters China, Soros warns of ‘tragic mistake’

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The world’s largest investment manager is entering mainland China’s onshore market, and a number of other Western companies are considering doing the same. The question is whether such strategies will work at a time when Western countries disagree with Beijing over the latter’s policies.

BlackRock has raised around $ 1 billion for the very first mutual fund managed solely by a foreign company licensed to sell to Chinese individuals, the
the Wall Street newspaper and others reported yesterday.

On August 30, BlackRock launched a set of mutual funds and other investment products for Chinese consumers.

Launches of such funds spark controversy over the extent to which Western companies should do business with China at a time when Beijing is at odds with the United States and Europe over human rights, repression national security last year in Hong Kong and other topics. .

The BlackRock China New Horizon Mixed Securities Investment Fund received more than 111,000 orders from individual investors in China during a five-day marketing period last week, the report said, citing a statement. The fund will allocate 60-95% of the assets in equities and certificates of deposit in sectors such as new energies, consumption, digital economy, healthcare, education and advanced manufacturing, WSJ report said.

BlackRock told this post that the first mutual fund of its wholly-owned fund management company in China was officially established on September 7.

“We are very proud to have taken this important step for our fund management business in China and we are grateful for the massive support from investors. As a client trustee, we are committed to helping investors improve their financial well-being. We are excited to be able to bring our investment and risk management expertise to help make investing easier and more affordable for Chinese investors, ”said Rachel Lord, President of BlackRock and Head of Asia -Pacific, in a statement sent by email to this press service.

Chi Zhang, Managing Director of BlackRock Fund Management, added, “We are very pleased with the official establishment of our first mutual fund in China. The support and confidence of our investors and distribution partners has been extremely encouraging. We are committed to providing long-term investment opportunities for Chinese investors, leveraging our experience in investing in A-shares and our expertise in investing and risk management to help further ‘investors to improve their financial well-being.

The fund will be distributed by China Construction Bank, Bank of Communications, Ping An Bank, CITIC Securities, Orient Securities, Huatai Securities, Shenwan Hongyuan Securities, Haitong Securities and Guosen Securities, BlackRock said.

China has lifted restrictions on foreign wealth managers, including ending restrictions on U.S. asset managers selling mutual funds to individual investors. BlackRock, which oversees more than $ 9.5 trillion in assets and is by far the world’s largest fund manager, was the first company to be fully licensed to sell its own mutual funds to Chinese individuals .

The newspaper’s report noted that other companies could follow BlackRock’s lead. Fidelity International obtained preliminary approval last month; Neuberger Berman and VanEck seek authorization for their mutual fund operations in China. As late as September 3, Paris-listed BNP Paribas was preparing for its asset management arm to form a wealth management business with a unit of the Agricultural Bank of China.

Soros, writing in the WSJ, described BlackRock’s push into the Chinese market as a “tragic mistake.”

The Hungarian-born financier, whose business is now run as a family office and no longer oversees foreign money, said BlackRock’s transactions in the Chinese economy will not only lose money for its clients long term, but will also cause damage to national security. of the United States and other democracies.

Soros wrote on September 6: “BlackRock takes its responsibilities to our customers’ money seriously and is a leader in the environmental, social and governance movement. But he seems to misunderstand President Xi Jinping’s China. The company appears to have taken Mr. Xi’s regime statements at face value. He drew a distinction between state enterprises and private enterprises, but that is far from the reality. The regime views all Chinese companies as instruments of the one-party state.

“This possible misunderstanding could explain BlackRock’s decision, but there may be another explanation. The benefits to be gained from entering the hitherto closed Chinese financial markets may have influenced their decision.

“The BlackRock Initiative puts the national security interests of the United States and other democracies at risk, as the money invested in China will help support President Xi’s regime, which is repressive at home and aggressive abroad.” . Congress is expected to pass legislation allowing the Securities and Exchange Commission to limit the flow of funds to China. The effort should have bipartisan support, ”he added.


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