SHANGHAI, Mar 5 Allianz, Europe's top insurer, is working to increase its stake in its Ch

SHANGHAI, Mar 5 (Reuters) Allianz, Europe's top insurer, is working to increase its stake in its Chinese fund management joint venture to the maximum allowable 49 percent this year, a top executive at the venture firm said on Monday.

Allianz has reached agreement with partner Guotai Junan Securities Co., one of China's biggest brokerages, on the plan to raise its stake to 49 percent from 33 percent, said Chiang Hsien, chief executive of Shanghai-based Guotai Junan Allianz Fund Management Co. Ltd.

Guotai Junan now owns a 67 percent stake in the country's first fund management joint venture, established in 2002.

Hsien said Guotai Junan, controlled by the Shanghai city government, was working with its own shareholders to finalise the plan, and that the fund venture would soon apply to regulators for approval.

''It's just a matter of time and I am very optimistic that this can happen before the end of this year or even (sooner),'' Hsien told Reuters in an interview.

About 30 foreign firms have already set up fund management joint ventures in China, aiming to win a slice of the country's more than $2 trillion in personal savings.

In late 2005, Beijing relaxed restrictions to allow offshore firms to own up to 49 percent of these types of ventures. Global wealth managers like UBS and ABN AMRO have taken advantage of the change.

But all of the ventures are still majority owned by either a single or combination of Chinese partners, often state-owned firms, to ensure local control.

HUNGRY FOR CHINA In a separate interview on Monday, senior executives of Societe Generale also told Reuters that the French bank wants to raise its stake in its Chinese fund venture Fortune SGAM Management Co. to 49 percent from 33 percent. They are awaiting regulator approval as shareholders have already agreed.

Both Chinese and international investors have shown a huge appetite for the country's domestic A-share funds as the benchmark Shanghai Composite index gained more than 130 percent in 2006 before setting new record highs this year.

But last week's sell-off of high-flying mainland shares helped trigger a global market slide, with equity and higher-risk debt markets stumbling.

Hsien said his firm remained confident in the long-term prospects for Chinese shares and was evaluating its plan to launch a new retail fund this year, which could focus on either stock or fixed-income investments, such as corporate bonds.

The firm now has five funds with more than 7 billion yuan ($904.3 million) in assets under management, he said.

Hsien said his company was also discussing whether to offer products under China's Qualified Domestic Institutional Investor scheme. Beijing launched the QDII scheme last year, partly to encourage capital outflows and ease upward pressure on the yuan.

''QDII can be the strength of (a fund) JV,'' said Hsien, adding Allianz has expertise in global investments while its partner Guotai Junan understands local client demands.

Last year, Beijing picked just one fund manager, Huaan Fund Management Co., to participate in the QDII scheme, with Wall Street investment bank Lehman Brothers acting as its overseas adviser.

Huaan was regarded as a pilot program for QDII business, while regulators were still finalising detailed investment rules for fund managers and securities houses.

($1=7.741 Yuan) REUTERS CS HS1817