Japan’s Sumitomo to launch 1st private fund in China

Japan’s Sumitomo Mitsui DS Asset Management will debut its inaugural private investment trust for equities in China next month. The fund is designed to target local institutional investors and high-net-worth individuals.

The actively managed fund will invest in yuan-denominated A shares listed on the mainland Chinese stock market.

To mitigate market volatility, the fund will also employ instruments such as index futures. Management of the fund will be overseen by the Japanese brokerage’s local arm.

The company secured approval from the Asset Management Association of China last week to establish the fund, becoming the second Japanese brokerage after Nomura Asset Management to offer a registered private fund in China.

The recent economic slowdown in the country has prompted investors to move their investments from Chinese stocks to markets like Japanese equities.

However, Sumitomo Mitsui DS believes that the Chinese equity market will grow in the long term due to the expected rise in high-net-worth individuals as investors.

In 2022, the company upgraded its Shanghai representative office to a full-fledged subsidiary and expanded its staff.

Sumitomo Mitsui DS aims to increase client assets in China to 200 billion yen to 300 billion yen ($1.3 billion to $2 billion) over the next 10 years.

Looking ahead, Sumitomo Mitsui DS plans to introduce trusts for Chinese investors focusing on different assets.

Attribution: The Nikkei Asia