Aberdeen AM open to securities lending in China
28 September 2015 Aberdeen
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Aberdeen Asset Management is open to launching a securities lending operation in China after being granted a business licence.
The licence was offered to the Scottish investment firm during the UK chancellor George Osborne鈥檚 visit to China as leader of a trade delegation.
鈥淲e always look at new markets in relation to the assets that our funds are currently holding and the incremental revenues that can be generated from lending,鈥� commented Matthew Chessum, investment dealer at Aberdeen Asset Management.
鈥淚t鈥檚 [securities lending] not something we would be looking at any time soon but we may consider implementing securities lending once the market develops if it is conducive to the activities on the investment portfolio.鈥�
Aberdeen will now be able to operate under the State Administration of Industry & Commerce in China.
As a part of negotiations around the seventh UK-China Economic and Financial Dialogue, China has agreed to allow qualified, locally-incorporated wholly foreign-owned or joint-venture private fund management institutions to engage in private security management businesses, including secondary market trading of securities, according to domestic regulations.
Chessum added: 鈥淭here are a number of factors that we have to take into account as well as just the potential revenues involved in lending in new markets. We study the risk profile, including what鈥檚 happening on the ground in the country as well as the overall liquidity and depth of the lending market in general.鈥�
鈥淲e would also look at any changes needed to existing processes. We find that our portfolio managers aren鈥檛 overly willing to give pre-sale notification, which is needed in some of the newer Asian lending markets, such as Taiwan.鈥�
The announcement came during a week-long tour of UK ministers and leading UK business to China.
This continues the UK government鈥檚 long-standing drive to forge greater links with the Asia Pacific region, and to consolidate London鈥檚 position as the Western hub for renminbi business outside of Asia.
Aberdeen鈥檚 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.
鈥淭he work undertaken to obtain a wholly foreign-owner enterprise licence is part of our overall strategy to ensure Aberdeen Asset Management is well placed for the next 10 to 20 years.鈥�
UK secretary of state for business Sajid Javid added: 鈥淎s we deepen UK-China relations it is rewarding to see Aberdeen Asset Management licensed to operate in China. The company will bring fund management expertise from the UK to the second largest economy in the world. I am committed to building relationships like this between our two nations.鈥�
To further its business aims in China, Aberdeen must now apply to be registered with the Asset Management Association of China.
The licence was offered to the Scottish investment firm during the UK chancellor George Osborne鈥檚 visit to China as leader of a trade delegation.
鈥淲e always look at new markets in relation to the assets that our funds are currently holding and the incremental revenues that can be generated from lending,鈥� commented Matthew Chessum, investment dealer at Aberdeen Asset Management.
鈥淚t鈥檚 [securities lending] not something we would be looking at any time soon but we may consider implementing securities lending once the market develops if it is conducive to the activities on the investment portfolio.鈥�
Aberdeen will now be able to operate under the State Administration of Industry & Commerce in China.
As a part of negotiations around the seventh UK-China Economic and Financial Dialogue, China has agreed to allow qualified, locally-incorporated wholly foreign-owned or joint-venture private fund management institutions to engage in private security management businesses, including secondary market trading of securities, according to domestic regulations.
Chessum added: 鈥淭here are a number of factors that we have to take into account as well as just the potential revenues involved in lending in new markets. We study the risk profile, including what鈥檚 happening on the ground in the country as well as the overall liquidity and depth of the lending market in general.鈥�
鈥淲e would also look at any changes needed to existing processes. We find that our portfolio managers aren鈥檛 overly willing to give pre-sale notification, which is needed in some of the newer Asian lending markets, such as Taiwan.鈥�
The announcement came during a week-long tour of UK ministers and leading UK business to China.
This continues the UK government鈥檚 long-standing drive to forge greater links with the Asia Pacific region, and to consolidate London鈥檚 position as the Western hub for renminbi business outside of Asia.
Aberdeen鈥檚 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.
鈥淭he work undertaken to obtain a wholly foreign-owner enterprise licence is part of our overall strategy to ensure Aberdeen Asset Management is well placed for the next 10 to 20 years.鈥�
UK secretary of state for business Sajid Javid added: 鈥淎s we deepen UK-China relations it is rewarding to see Aberdeen Asset Management licensed to operate in China. The company will bring fund management expertise from the UK to the second largest economy in the world. I am committed to building relationships like this between our two nations.鈥�
To further its business aims in China, Aberdeen must now apply to be registered with the Asset Management Association of China.
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