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REITs to help China funds compete with banks, insurers
October 21, 2009 / 8:43 AM / 8 years ago

REITs to help China funds compete with banks, insurers

SHANGHAI, Oct 21 (Reuters) - China’s planned launch of a real estate investment trust (REIT) market will give mutual fund companies access to areas other than stocks and bonds, helping them to compete with banks, insurers and trust firms, a researcher at China’s securities regulator said on Wednesday.

“REITs would represent a big step forward for the mutual fund industry, giving them access to alternative investment opportunities,” Wang Ou, deputy director of research at the China Securities Regulatory Commission (CSRC), told a conference.

“On the other hand, people need to share rapid growth of the real estate sector through capital markets.”

China’s asset management business is expanding rapidly as investor appetite grows amid rising wealth income in the world’s third-largest economy.

Wang added that China’s mutual fund houses not only compete with each other, but are increasingly competing with other types of financial institutions such as banks and insurers to manage rising wealth in the country.

China plans to allow mutual fund companies and brokerages to launch publicly-traded REITs, people familiar with the situation told Reuters in August, citing draft CSRC rules.

REITs invest mainly in commercial and industrial properties and pay most of their rental incomes as dividends.

Wang forecasts huge growth potential for China’s mutual funds industry as demand for wealth-management rises as people get older.

Mutual fund assets may exceed its 2007 peak of 3.3 trillion yuan ($483 billion) by the end of this year, from less than 2 trillion yuan at the end of 2008, fuelled by a stock market rebound and fresh fund inflows, he said.

China’s stock market has gained more than 60 percent this year, following a 65 percent tumble in 2008. (US$1=6.832 Yuan)

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