It's been a common type of investment vehicle in the rest of the world for a long time, but in China it's a big challenge. That's where the foreign firms come in, bringing expertise in management of securities administration and settlement, disclosure, marketing and brand development as well as after-sales service. But no one is expecting a smooth ride to riches. Foreign fund managers in joint ventures will have to grapple with regulatory weaknesses, the highly speculative nature of China's stockmarkets and the lack of attractive investments. What's more, even domestic brokers admit the markets are riddled with insider trading, price manipulation and poor corporate disclosure.
Some observers wonder if even the market's potential warrants the rush.
The punters will still prefer to buy the individual stocks. At least in the short term, I don't see much value-added in funds. Wrong attitude, says Pickerell of Jardine Fleming. While he expects bumps along the way, he is far more optimistic. The challenge will be getting in there and researching the hundreds and hundreds of companies that truly belong in a long-term portfolio, that have good growth prospects and have reasonable levels of corporate governance.