Aberdeen Defies China Slowdown With Key Deal

Aberdeen Asset Management (Other OTC: ABDNF - news) is to become the first British fund manager to gain a key licence from Beijing to operate on the Chinese mainland just weeks after turmoil in Shanghai's stock markets hit the FTSE-100 group's shares.

Sky News has learnt that Aberdeen will sign a deal with Chinese authorities next week as part of a trade mission led by George Osborne, the Chancellor, and Sajid Javid, the Business Secretary.

Treasury insiders said that Aberdeen's business in China would become incorporated as a Wholly Foreign-Owned Enterprise (WFOE), which will give the British company a more robust platform to grow its presence in the world's second-largest economy.

As part of the deal, it is expected to open a full office in Shanghai to supplant the representative presence it has there now, and will gain greater freedom to publish research on companies listed on the mainland's equity markets.

Alex Boggis, Aberdeen's head of Greater China, is expected to sign the agreement on Tuesday, according to a source with knowledge of the itinerary.

Aberdeen's exposure to emerging markets has spooked investors in recent months, with net outflows reflecting a desire to divert assets to developed world economies.

Last month's slump in the so-called A-share market in China sparked panic-selling in London and New York amid fears that Chinese economic growth may be much lower than official data suggests.

Aberdeen has nearly one-third of its clients' assets invested in emerging markets and the broader Asia-Pacific region, with the exception of Japan. Roughly 5% of clients' assets are invested in Chinese companies through Hong Kong-listed shares.

Martin Gilbert, Aberdeen's respected chief executive, has continued to reaffirm his commitment to the group's strategy, insisting that its exposure to faster-growing markets will pay off over the long term.

Mr Gilbert is also a director of Sky plc (LSE: BSY.L - news) , the owner of Sky News.

Aberdeen has seen its shares fall by nearly a quarter during the last year, but it has continued to be acquisitive, buying Advance Emerging Capital, a specialist investment manager, earlier this week.

The Aberdeen deal will be one of a number struck during the Chancellor's visit, with companies including Barclays (LSE: BARC.L - news) , Deloitte, HSBC and Standard Life (LSE: SL.L - news) all represented on the trip.

Mr Osborne said on Friday:

"I want us to forge closer economic and cultural links with China. Our partnership for growth, reform and innovation is helping to deliver record levels of investment and trade in both directions, but there is much more we can do.

"This trip is all about exploring new opportunities to open up new markets to benefit both economies."

In a statement, the Treasury added that the Chancellor would argue that "far from backing away from China after the events of the summer, Britain aims to increase cooperation and understanding between the two countries and open up billions of pounds of potential opportunities between what remains the world's fastest growing major economy and the UK".

An Aberdeen spokesman declined to comment on Saturday.