SHANGHAI, Mar 5 (Reuters) JPMorgan Chase&Co.'s Chinese fund management joint venture is hoping to raise up to 8 billion yuan ($1.03 billion) with a retail fund investing in consumer-related stocks, the venture's head said on Monday.
The venture, China International Fund Management Co. Ltd., filed an application with regulators in November and pending approval, expects to launch it in the first half, said Mandy Wang, the firm's chief executive.
''The fund name is China Consumption. It's a local equity fund. We'd buy the China domestic demand story,'' she told Reuters in an interview. ''We hope to cap around 8 billion yuan.'' She added the size of the venture's sixth fund would ultimately depend on market conditions.
China's stock market helped trigger a global market selloff last week after the Shanghai market plunged almost 9 percent on Feb. 27 in its biggest drop in a decade.
The sell-off has failed to cool China's red-hot fund industry. One new fund raised 10 billion yuan within just one hour on Feb 27, even as the stock market started to tumble.
Wang said the firm would like to launch a second fund this year that would offer local investors access to international equity markets using China's Qualified Domestic Institutional Investor (QDII) scheme.
''It definitely would be investing in international equities.
We would not be offering any fixed-income products,'' Wang said.
POOR QDII DEMAND SO FAR Beijing launched the QDII scheme last year, partly to encourage capital outflows and ease upward pressure on the yuan.
It allowed just one fund manager, Huaan Fund Management Co., to participate in the scheme, with Wall Street investment bank Lehman Brothers acting as its overseas adviser.
But demand for QDII products was poor. Most were confined to investing in fixed income markets, which limited returns. These were then eroded by the appreciation of the Chinese currency against the dollar.
Investors were also reluctant to invest in foreign products at a time local stocks were soaring in value. The benchmark Shanghai Composite index rose more than 130 percent in 2006.
Wang said demand should be stronger for an equity-based product and that China International would submit an application as soon as regulators begin formally accepting them.
Several Chinese fund management companies are awaiting regulatory approval to launch funds after authorities last month ended an informal two-month freeze.
The China Securities Regulatory Commission (CSRC) suspended the approval of new funds late last year for fear of further fuelling the rally that made Shanghai the world's hottest big exchange last year.
Last month China International took the unusual step of closing three of its equity funds to new investments, warning that the hot market has made it too difficult to place fresh money.
REUTERS CS DS1658