KBC China venture eyes new funds

The China fund venture of Belgian banking and insurance firm KBC Groep NV said last week that it expects to launch two to three funds annually over the next few years in the country, despite the market turmoil.

Two-year-old KBC Goldstate Fund Management Co., which has launched a capital-guaranteed fund and an equity fund in China, plans to start a bond fund early next year, although the timing depends on regulatory approval, Chief Investment Officer Lode Vermeersch said at the Reuters China Summit last week.

“In the next 10 years, we’d like to have a balanced portfolio of funds” that include bond, equity, money market and capital guaranteed funds, Vermeersch said.

Once it meets regulatory requirements, it will also consider setting up funds that help Chinese invest abroad under China’s Qualified Domestic Institutional Investor (QDII) scheme, he said.

KBC Goldstate is also the investment adviser for KBC’s asset management arm, which in June obtained Chinese government approval to invest in the country’s capital markets under the Qualified Foreign Institutional Investor (QFII) scheme.

KBC competes with 30 other foreign financial institutions, including AIG and HSBC Holdings, for a share of China’s $263 billion asset management industry.

After a two-year-old stock market bull run that lasted until the end of 2007, fund managers face tough challenges after the stock market tumbled more than 70% from its peak due to economic worries and a global financial crisis.

China’s stock prices have already fallen sharply amid the economic downturn, but it’s difficult to say the market is near its bottom, and KBC Goldstate will be cautious in making equity investments, Vermeersch said.

“As long as the volatility is very high, and as long as there’re few indications of sustainable improvement of the stock market, yes, we have to be careful,” he said.

KBC Goldstate, 49% owned by KBC, last August launched a bond-focused capital guaranteed fund shortly before the peak of China’s stock market, helping to shield its investors from the equity market tumble. —Samuel Shen, Reuters