JP Morgan funds arm targets 'enormous' China potential

Titherington: Enormous potential in China over next decade

Richard Titherington, the firm’s chief investment officer and head of emerging markets and Asia Pacific equities, who relocated from London to Hong Kong last year and is responsible for $ 80 billion in assets, told Financial News: “China is extremely important for the next decade or more, both in terms of investing in China for international clients and in terms of the growth of the domestic asset management industry, which in our view will grow to rival the US, certainly over the next decade.

“My focus is obviously equities, but I would expect us to build out the full range of capabilities that JP Morgan AM has got, which are alternatives, real assets, fixed income, solutions and equities.”

The $ 1.7 trillion fund manager, which confirmed on September 6 that it had received licence approval from the Shanghai authorities to set up a wholly foreign-owned asset management enterprise, now has its own office in the city.

Since May 2004, JP Morgan AM has had a joint venture called China International Fund Management with the Shanghai International TrustCo, which Titherington said manages about $ 10 billion. JP Morgan Asset Management also manages about $ 20 billion in equities in China for international clients.

JP Morgan AM’s new licence enables it to operate independently in the country.

Titherington added: “We want to be a local fund manager in China as we are in Japan. We also want to be a leading manager of Chinese equities, both for domestic and international clients.

“Over the next five to 10 years, the Chinese equity market will rival the largest equity markets in the world in total size. We have the opportunity to build a capability which is second to none, so on a five to 10-year view, the potential is enormous.”

The Chinese market, however, suffered an unstable 2015, punctuated by severe volatility, listing suspensions and stock market crashes. In June this year, index provider MSCI also said it would not add China’s local currency shares to its benchmark emerging markets index, a blow to the country’s efforts to join international markets, after its inclusion had been widely anticipated by investors.

Titherington admitted that sentiment from overseas investors for China remains “very pessimistic”.

He added: “What people overlook is it is an immature capital market with huge volatility and regulators who are struggling to keep up with the pace of development, and so I would expect it to continue to be volatile but I think the trend is upward and most of the issues that [China is] facing can be resolved.

“It will continue to be a rocky ride but I’m still quite optimistic.”

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