(Bloomberg) -- Morgan Stanley gained full control of its fund management joint venture in China, joining rival JPMorgan Chase & Co. in buying out local partners to boost their presence in the nation’s 26 trillion yuan ($3.86 trillion) market. 

The China Securities Regulatory Commission gave approval to the US bank to boost its stake in the Shenzhen-based Morgan Stanley Huaxin Fund Management Co. to 100%, according to a statement on the regulator’s website.

Wholly-owning the China mutual funds business “adds a significant pillar of growth to our global investment management franchise,” Dan Simkowitz, head of investment management at Morgan Stanley, said in an emailed statement. 

Global companies are making headway in China’s mutual fund space after regulators quickened approvals since late last year, increasing the number of wholly-foreign owned operators. The approval for full control of the unit, while still small, will help drive asset growth at Morgan Stanley, which is hiring private bankers in Asia to tap rising demand from wealth clients after China reopened its borders.

JPMorgan recently got regulatory approval for full control of its fund joint venture, two months after Manulife Financial Corp. became the first foreign firm to win 100% ownership of such a business through an acquisition. Other companies that have wholly-owned mutual fund operations include Fidelity International Ltd., Neuberger Berman Group and BlackRock Inc. 

While fundraising from new product launches slumped by half in 2022 to 1.5 trillion yuan amid a stock-market rout and pandemic curbs, assets under management for the industry still managed to grow by about 2%. The prospects have brightened this year as the economy recovers after China dismantled its stringent Covid curbs, with the CSI 300 Index rallying about 7% so far this year. 

Morgan Stanley Huaxin Funds, as the venture is known, managed 23.8 billion yuan as of Dec. 31, according to East Money Information Co. data. It won approval Jan. 10 to provide overseas securities investment services as a qualified domestic institutional investor. 

--With assistance from Lin Zhu.

©2023 Bloomberg L.P.