Mellon's China fund hopes dashed

Mellon Financial's plan to expand into China's US$64 billion mutual fund market has suffered a setback after the US group failed to acquire a stake in Soochow Securities, a Chinese brokerage firm that holds a 49% stake in Soochow Fund Management, the country's smallest fund house by assets under management, the Financial Times reported. The negotiations broke down because of disagreements over valuation, probably as a result of the sharp upturn in Chinese stocks this year. There are 20 Sino-foreign fund management joint ventures which account for about 30% of China's mutual fund market. Mellon, one of the world's biggest fund managers, will open a Beijing-based representative office designed to bolster its market research and regulatory lobbying efforts.