Aberdeen Asset Management has gained a business licence to operate in China as it looks to “significantly strengthen” its presence in Asia.
The State Administration of Industry & Commerce in Shanghai have granted the license to a new subsidiary of the group. This licensee will enable the group to set up an office in China under the pilot free-trade zone.
The company will be considered a wholly foreign-owned enterprise (WFOE). This means it will be able to engage in private security management, such as secondary market trading of securities.
Having received its licence to operate from the State Administration of Industry & Commerce (SAIC), the group’s next step is to apply to be registered with the Asset Management Association of China.
The company first opened an office in China in 2007, which has helped to gain the license. It will now look to add analysts and local equities and business development staff.
At present, Aberdeen - whose Asia Pacific team has historically been bearish on the region - does such research mainly from Hong Kong, a presence it said will be maintained.
The UK secretary of state for business, Sajid Javid, said: “As we deepen UK-China relations it is rewarding to see Aberdeen Asset Management licensed to operate in China.” He added that he is “committed to building relationships like this” between the two countries.
Aberdeen chief executive, Martin Gilbert, said: “UK business cannot ignore the structural development of China. It is already the second largest economy in the world and will sooner or later surpass the US.”
Referencing its historic caution over Chinese holdings, Aberdeen said it “had warned investors that the local stockmarket was overvalued and struck a cautious note on the slow pace of SOE reforms.” The group also noted some “nervousness over the quality of some bond issuance.”
Hugh Young, managing director of Aberdeen’s Asian business, comments: “While we welcome China’s steady market opening and we’re thrilled to gain our WFOE licence, we will proceed slowly. It’s important to maintain our investment disciplines and assess opportunities carefully.
“While the asset management industry there is young and the potential huge, our vow is to avoid short termism and focus on quality.”
