Invesco raises $5.4 billion in China investments in first half; flags economic risks

© Reuters.

(Corrects 10th paragraph to show company plans to increase holding in joint venture, not that it has no such plans)

By Selena Li

HONG KONG (Reuters) -U.S. asset manager Invesco's Chinese joint venture withstood a volatile first half and attracted $5.4 billion from local investors, but the country's persistent zero-COVID policy poses risks to the economy, its Asia Pacific head said.

China's economy has been hit hard by COVID-19 lockdowns and property sector turmoil, which have squeezed investors' holdings and sent asset prices lower.

"The market sentiment is tough, especially for COVID and everything," said Andrew Lo, Hong Kong-based chief executive officer of the Asia Pacific unit of Invesco, which manages $1.4 trillion worth of assets globally.

"I think people are resilient ... But I would like to think that if it (zero-COVID policy) continues it would take a toll on people and also the economy," Lo told Reuters, adding the policy could "evolve" from its current status next year.

Despite the near-term challenges, Invesco plans to expand its team in China to capture flows when the market bounces back, he said, adding that China, the firm’s global growth driver, remains "a very attractive market".

Invesco's 49% owned China joint venture, Invesco Great Wall Fund Management, managed to raise $5.4 billion from Chinese investors in the first six months of this year, mostly into its fixed-income funds against a sluggish fundraising market.

The JV, with 354 billion yuan ($50.51 billion) of assets under management excluding money funds, has added more than 20 staff this year across investment and operational functions. It posted a profit of 756 million yuan in the first half.

Invesco Great Wall in March launched a fund advisory business and has partnered with seven fund distributors, including Ant Fund and Tiantian Fund, two of China's largest non-banking fund sales agencies.

Since China relaxed foreign ownership restrictions, foreign peers of Invesco, including JPMorgan (NYSE:JPM) and Manulife, have rushed to take control of their fund joint ventures or moved to launch greenfield operations.

The U.S. manager is planning to increase its holding in the joint venture but has no intention in buying out its partner China Great Wall Securities which would mean taking full control, according to Lo.

In Asia, Invesco saw stronger demand from regional clients in its private investment products such as private real estate funds, and rising interest in exchange-traded funds listed outside of Asia from institutions.