The Dream Factory of China

　　Shenzhen Qianhai Financial Holdings Co., Ltd. (QHFH) and Hang Seng Bank signed a Joint Venture Agreement in Qianhai on 24 July 2015, marking an important step forward in their preparation for making an application to establish a joint venture fund management company in mainland China. In the inter-ministerial joint meeting for the construction of the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone held in February 2013, the China Securities Regulatory Commission (CSRC) mentioned for the first time that fund management companies with Hong Kong-funded financial institutions as majority shareholders may be set up in Qianhai under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA). On 29 August 2013, Supplement X to CEPA was signed by the Central Government and the HKSAR Government. The Supplement further relaxed the securities market entry requirements and specified that qualified Hong Kongfunded financial institutions may, in accordance with relevant Mainland requirements, set up joint venture fund management companies on the Mainland in which their shareholding percentage could exceed 50%. Hang Seng and QHFH will be the first companies to make an application to establish a majority foreign-owned joint venture fund management company on the Mainland under Supplement X to CEPA. Subject to the approval of the relevant Mainland regulatory bodies, Hang Seng Bank will be the majority shareholder of the joint venture company – a significant development compared with previous arrangements under which foreign institutions could only be minority shareholders.

　　Attending the signing ceremony were:

　　- Mr Xu Anliang, Vice Mayor, Shenzhen Municipal People’s Government;

　　- Mr Zhang Bei, Director, Authority of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone;

　　- Mr Jiao Jinhong, Director-General, Shenzhen Regulatory Bureau, China Securities Regulatory Commission;

　　- Mr Lin Fan, Executive Vice President, Shenzhen Stock Exchange;

　　- Mr Liu Daping, Division Director, Division of Finance, The Development of the Shenzhen Municipal Government Financial Services Office;

　　- Miss Salina Yan, Deputy Secretary for Financial Services and the Treasury (Financial Services), the HKSAR Government;

　　- Ms Julia Leung, Executive Director of Investment Products, Securities and Futures Commission;

　　- Ms Rose Lee, Vice-Chairman and Chief Executive of Hang Seng Bank; and

　　- Mr Li Qiang, Chairman of the Board, Shenzhen Qianhai Financial Holdings Co., Ltd.

　　Ms Lee said: “Hang Seng Bank is delighted to be forging a strategic partnership with Shenzhen Qianhai Financial Holdings under Supplement X to CEPA. This reflects the enormous potential of cross-border financial business development, and the prospect for collaboration between Mainland and Hong Kong financial institutions in promoting wealth management business to their mutual benefit. The signing of the Joint Venture Agreement today represents the commitment of Hang Seng Bank and Shenzhen Qianhai Financial Holdings to future cooperation. We are confident the joint venture fund management company will make a valuable contribution to the Mainland and Hong Kong financial industries.

　　Mr Li commented: “The agreement of Hang Seng and QHFH to establish a joint venture fund management company responds to the directive of President Xi Jinping to enhance cooperation between Shenzhen and Hong Kong and boost the growth prospects of Hong Kong. This initiative will also facilitate the development and innovation of financial institutions in Qianhai by bringing in Hang Seng’s expertise in asset management. The joint venture company will take advantage of Qianhai’s pilot policies amid financial reform on the Mainland, as well as the global vision and extensive experience of Hang Seng, to boost the growth of the Mainland fund market and establish a new benchmark for the financial sector in Qianhai.”

　　According to the current plan, the primary business scope of the joint venture company will include fund raising, fund sales, asset management, etc, with the aim of providing professional and comprehensive fund products and asset management services for individual and institutional investors. As one of the major fund distributors in Hong Kong, Hang Seng Bank distributes a diverse range of investment funds from various fund houses, covering financial markets around the world as well as major asset classes and investment strategies. Hang Seng Investment Management Limited (HSVM), a whollyowned subsidiary of Hang Seng Bank, has more than 20 years of experience in asset management. Leveraging its strong capabilities for investment management, fund product development and fund sales, HSVM has expertise in managing funds related to the Mainland and Hong Kong equity markets, index-tracking strategies and offshore renminbi fund products. Its funds have been investing directly in the Mainland securities market for more than a decade – first through the Qualified Foreign Institutional Investor (QFII) regime and, later, through the Renminbi Qualified Foreign Institutional Investor (RQFII) regime. HSVM is the largest issuer of exchange-traded funds in Hong Kong in terms of assets under management (AUM). As at the end of June 2015, HSVM’s total AUM were around HKD190 billion.

　　QHFH is a wholly state-owned financial holding company founded by the Authority of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone (the Authority). As the only strategic financial holding company of the Authority, QHFH undertakes the missions of policy output, industry guidance and financial innovation. Since its establishment, QHFH has taken advantage of its pilot policies and collaboration between Shenzhen and Hong Kong to establish cooperation with a number of sizable financial institutions and leading companies. QHFH has provided assistance to licensed and innovative financial institutions as well as to fund companies to set up their businesses in Qianhai through the establishment of new companies and joint ventures. In 2015, QHFH launched the first offshore renminbi bond based on the Qianhai concept in Hong Kong and contributed to the first public offering of a real estate investment trust on the Mainland. This time, QHFH will have equity participation in the joint venture fund management company to be set up together with a Hong Kong-funded institution, representing another important achievement of QHFH in implementing Supplement X to CEPA and promoting cooperation between Shenzhen and Hong Kong.