BNY Mellon Western Fund Management Co., a Chinese joint venture of the world’s largest custody bank, plans to nearly double staff by 2011 after receiving approval to start doing business in China.
“We plan to increase staff to around 70 by around the end of next year from the 40 we have now,” said Bin Hu, Chief Executive Officer of the venture between BNY Mellon and Xi’an, China-based Western Securities Co. “They will be mainly investment, sales and back office.”
BNY Mellon last month became the first fund management company to be granted a business license in two years, Hu, 43, said in an interview in Shanghai. The venture is seeking a quota from regulators to invest in local-currency stocks after its U.S. shareholder was awarded a license under China’s qualified foreign institutional investor, or QFII, program.
Hu, a former hedge-fund manager at Coefficient Global LLP in San Francisco, said he’s “cautious” on Chinese equities given concerns that inflation will hamper government measures to stimulate growth.
China’s stocks rose yesterday after a slowdown in industrial output growth and new lending boosted prospects the government will loosen monetary policy to shore up the economy. Inflation quickened to 3.3 percent in July, the fastest in 21 months, boosted by rising food costs, according to the statistics bureau.
“The policy is not clear,” Hu said. “CPI is not too high but the government may not feel too comfortable with what it’s seen. The next step is to continue to cool down the real estate market.”
Consumer Boost
The Shanghai Composite Index has advanced 10 percent from this year’s low on July 5 as investors speculated the government would ease property curbs and allow more lending to counter slowing growth. That’s pared 2010 losses to 20 percent.
Hu said he expects consumer and health-care stocks to outperform given the government’s plan to offset a slowdown in exports through increased investment in domestic consumption and other areas that have been neglected. “The key issues are real estate and structural change,” he said.
Bank of New York Mellon Corp. said July 20 second-quarter earnings more than tripled on higher fees for overseeing and managing investor assets. The shares have fallen 11 percent this year, compared with a 2.3 percent loss for the Standard & Poor’s 500 Index.
Custody banks earn fees from keeping records, tracking performance and lending securities to institutional investors including mutual funds, pensions and hedge funds.
