Nikko raises stake in Chinese fund manager

Japan's Nikko Asset Managent has doubled its holding in Chinese mutual fund operator Rongtong Fund Management to 40%, the Financial Times reported. Nikko's Chairman and CEO Timothy McCarthy told the newspaper that the deal would "formulize" a two-year-old research partnership between the two firms. The Japanese company will also be able to nominate two directors to the nine-strong board and have a say on Rongtong's audit, compensation and risk oversight committees. In March, Nikko became the first Japanese fund house to enter China's US$148 billion mutual fund market when it spent US$12.4 million on its original 20% stake in Shenzhen-based Rongtong. A high degree of operational control is expected to help the company avoid embarrassing slip-ups in the still immature industry, although McCarthy said he would not be pressing for any changes in Rongtong's management structure just yet. Nikko manages more than US$1 billion in A-share investments for mutual fund clients in Japan.