Investment Funds: Where Taiwan And China Sit at the Same Table
Explosive growth in Asia attracts US investors to new funds
IN a scene that only a few years ago might have been politically unthinkable, investment officials from China and Taiwan will join American investment advisers around a conference table in Shanghai sometime in the next few months. Their objective: to pinpoint lucrative investment ventures in China.
``China, and Asia in general, are expected to provide very favorable economic growth rates during the next five to 10 years,'' says Hugh Winokur, president of Lynch & Mayer Asia, a subsidiary of Lynch & Mayer Inc. in New York. Mr. Winokur is expected to be one of the Americans at the investment strategy session in Shanghai; all will be members of a new investment fund, the Asia Corporate Partners Fund. The delegates from China and Taiwan will come from the largest private development bank in Taiwan and one of the four national banks in China.
This week, officials from Lynch & Mayer, as well as from the China Development Corporation, Taiwan's largest private investment bank, are touring the US, trying to raise money from pension funds, universities, and wealthy individuals for their new Asia Corporate Partners Fund.
It should be a relatively easy sell. United States dollars are already pouring into Asia, fueled by investors eager to profit from the region's attractive growth rates, expanding populations, enterprising companies, and relative political stability.
The Asia Corporate Partners Fund is a closed-end fund that will invest up to 50 percent of an anticipated $250 million in assets in China. The remainder will be invested in other Asian countries, including Hong Kong, Indonesia, Korea, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.
The Asia Corporate Partners Fund is not the only fund targeting Asian investments. On Sept. 22, the Templeton family of mutual funds announced its newest Asian venture: the Templeton Dragon Fund Inc., a closed-end fund listed on the New York Stock Exchange and the Osaka Stock Exchange. (The Asia Corporate Partners Fund is not listed on an exchange, since it will make direct investments in companies rather than stock market investments.)
The Templeton Dragon Fund has already sold 53 million shares, raising $795 million. Up to one-half of the fund's assets will be invested in China; up to 20 percent of its assets will be invested in Japan; and the remaining 35 percent in other Asian nations.
Templeton now has about 10 investment funds geared to Asia, says Holly Gibson, a spokeswoman for the Franklin/Templeton Group of Funds in San Mateo, Calif.
Analysts following the Asian investment market are generally upbeat about long-range growth prospects and investment potential.
Many US brokerage firms have established extensive operations in Asia. For example, before joining Lynch & Mayer Asia, Winokur helped oversee Asian investment banking for Goldman, Sachs & Company in New York.
While some Asian markets sputtered slightly in September, in part reflecting higher interest rates in the US, they still performed better than European stock markets, according to Morgan Stanley & Co. in New York. For the third quarter, which ended Sept. 30, Morgan Stanley's Combined Far East Index, which includes most major Asian economies except Japan, was up 11.8 percent.
Some analysts suggest caution regarding Asia. Timothy Moe, an Asian expert with New York-based investment firm Salomon Brothers, writes in a new study that rising interest rates will slow growth in the US - a key market for Asian-made goods - and could inhibit economic growth in some Asian nations.