Analysis Of Foreign Ownership To The Performance Of Fund Companies In Our Country

From the initial release to today’s prosperity, our funds has been20years of history. Duringthis period, the fund company has experienced from nothing to a few, from small to large, fromonly having domestic capital to the introduction of foreign capital, and the operations andgovernance of fund company become more standardized and mature. With the acceleration ofthe pace of Chinese opening-up and the arrival of economic globalization, the role of foreigncapital increasingly get recognized by all countries. With a series of preferential policies, foreigninvestment has been introduced largely, and has become an important driving force to promoteChinese economic development. April2010, the State Council announced the "Several Opinionsof the State Council on Further Improving the Utilization of Foreign Investment" which pointthat the use of foreign capital is an important part of Chinese basic state policy of opening up.Phenomenon of foreign equity participating in Chinese listed companies and fund companiesbecomes increasingly common, apparently this phenomenon will have a significant impact onChinese financial development and corporate governance.Using sample data in2006-2011of Chinese65fund companies in the paper and based onthe perspective of foreign capital into Chinese securities investment fund, we examines the basicsituation of Chinese fund companies development and foreign ownership holding Chinese fundcompanies, analyze the difference of performance between pure Chinese fund companies andsino-foreign joint venture fund companies and explore the relationship with foreign ownership tothe performance of fund companies. Data shows that in our fund companies, the number ofjoint-venture fund companies continue to rise, and even exceed the number of pure Chinese fundcompanies. Phenomenon of foreign ownership holding our fund companies becomesincreasingly common, and the proportion of foreign ownership continues increasing, more than1/3of the fund companies have reached the proportion of foreign ownership limit of49%stake,foreign capital have important influence on Chinese fund companies increasingly. The empiricalshows that the performance of sino-foreign joint venture fund companies is significantly betterthan the performance of pure Chinese fund companies, while there is no evidence shows that theproportion of foreign ownership has a significant positive impact on fund performance.Nowadays, the reason of non correlated by foreign ownership to the performance of fundcompanies have many, such as Chinese financial market is far from perfect, capital project is notyet open, the RMB exchange rate failed to achieve fully convertible, conflict between theChinese parties and foreign parties. Accordingly, this paper proposes a four-point measures,namely open Chinese financial markets and encourage to introduce foreign investment; improve laws and regulations, standardize the behavior of foreign ownership; foster healthy fund market,exert the active role of foreign investors; optimize the shareholding structure, strengthenregulatory and constraints of large foreign shareholders.