People walk outside the headquarters of the China Securities Regulatory Commission in Beijing. File photo: VCG

AllianceBernstein Hong Kong Limited has applied for a license to set up a mutual fund company in China, according to information released by the China Securities Regulatory Commission (CSRC).

According to the website of the CSRC, the commission received the application on Thursday, making it the fifth foreign company applying to set up a public fund so far this year, after BlackRock, Neuberger Berman, Fidelity and VanEck. 

The move comes amid China's increasing openness in the financial sector, which has been valued at almost $50 trillion. In October 2019, the CSRC said that overseas money managers would be allowed to apply for total control of operations in China from 2020, with applications starting from January 1 this year for futures firms and April 1 for fund management businesses. 

One of AllianceBernstein's fund products, the China A Shares Equity Fund, was already investing in the Chinese mainland through existing stock connect programs between Hong Kong and mainland markets in Shenzhen and Shanghai. As of the end of the third quarter, its most-invested sectors in the mainland included finance, information technology, health management and raw materials.

"Global money managers are embracing opening-up policy in China's financial sector because there is huge potential for their businesses," said Dong Dengxin, director of the Finance and Securities Institute at the Wuhan University of Science and Technology.

"Under the previous restrictions, foreign firms' operations in China were mainly limited to wealth management," Dong said. "Now they can cater to a much larger and more diverse group of clients."

In August, the New York-based global money manager BlackRock received the first approval from the CSRC for a foreign company to set up a wholly owned mutual fund management company. Its business scope will include mutual fund management, fund sales and private asset management. 

JP Morgan Chase has been increasing its stake in its fund management joint venture with Chinese partners. Earlier this month, the bank raised its stake in the securities joint venture to 71 percent, the first to increase its holding to exceed the previous 49-percent cap. Other foreign firms seeking to dive into China's financial market include Schroders, Amundi and Temasek. 

"Wall Street has been waiting for this moment for almost two decades," Dong said. "It is a lucrative market that it has long coveted. There is no doubt more applications from foreign firms will come."
Newspaper headline: Alliance Bernstein applies to set up fund firm in China