China’s top executive body, the State Council, late on Wednesday published high-level measures for “promoting the high-quality development of venture capital.” “Everything is going to depend on the implementing regulations,” said Marcia Ellis, global co-chair of private equity practice at Morrison Foerster. “Venture capital investors are not going to make investments unless they can see a reasonably clear path to an exit,” she said, noting that has not been case for the past year or so. A man walks a dog in the shade away from the midday sun past the New York Stock Exchange (NYSE) building in Manhattan, during hot weather in New York City, New York, U.S., August 11, 2020. Mike Segar | Reuters

BEIJING — Chinese authorities this week announced new policy for supporting venture capital, raising hopes for faster approvals of initial public offerings in the near future.

A once-burgeoning ecosystem of investment capital and startups in China has slowed drastically in the last three years amid increased regulatory scrutiny.

In one of the latest efforts to shore up the industry, China’s top executive body, the State Council, late on Wednesday published high-level measures for “promoting the high-quality development of venture capital.”

“Everything is going to depend on the implementing regulations,” said Marcia Ellis, global co-chair of private equity practice at Morrison Foerster.

“It’s positive the government at the central level has realized there is a problem,” Ellis said. “At least with respect to investments in technology, venture capital can be a positive force in the market in China that frankly can help China compete with the U.S. in the tech race.”

In terms of actions to watch, Ellis said that “really what we’re looking for as far as IPOs, is if the approvals start coming out at a quicker pace.”

“Venture capital investors are not going to make investments unless they can see a reasonably clear path to an exit,” she said, noting that has not been case for the past year or so.

The new policy included a section on expanding exit channels for venture capital, with an emphasis on supporting companies with technological breakthroughs. The measures also called for implementing a management system for overseas listings and smoothing the exit channels for venture capital funds not denominated

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Invesco is launching the first European exchange traded fund tracking China’s tech-heavy ChiNext 50 index, in a rare western vote of confidence in the world’s second-largest economy.

The listing comes as closures of China-focused ETFs have risen to a record level, with investors and fund houses recoiling from years of poor stock market performance and rising geopolitical frictions that have led some to question the ethics of investing in the increasingly authoritarian state.

Fund managers globally scrapped 18 China ETFs in the first quarter of 2024, more than half of last year’s record total of 34 closures, according to data from Morningstar Direct, with Global X, Xtrackers and KraneShares among those wielding the axe.

The rate of launches has also slowed sharply, with just 33 China ETFs unveiled in Q1 — all but three of them domiciled in either China or Taiwan. This compares with 160 launches during calendar year 2023 and a record 291 during the peak of Sino mania in 2021.   

Poor performance has been a key driver of souring sentiment, with China’s blue-chip CSI 300 index still 39 per cent below its peak of February 2021 — despite robust intervention by Beijing’s “national team” of state-backed institutions, which ploughed Rmb410bn ($56bn) into domestic equity ETFs in the first two months of 2024 alone, according to calculations by UBS.

Chris Mellor, head of Emea equity ETF product management at Invesco, disputed any notion that this meant Chinese stock prices were being propped up at artificially high levels, arguing instead that they were now cheap.

“Multiples are only marginally above the lowest that we saw in 2019, at 20 times forward earnings,” Mellor said. “They had traded as high as 40-50 times in 2020/21. China looks cheap, rather than expensive, in terms of other markets.”

The Invesco ChiNext 50 Ucits ETF (CN50) will invest in 50 of the largest and most liquid securities among the 1,300 listed on the ChiNext market of China’s mainland Shenzhen stock exchange.

This gives it an innate sector skew: at launch about 90 per cent of its weight will be in technology, industrials, healthcare and financial stocks, Mellor said, with no exposure to real estate, energy, utilities or consumer stocks.

The largest holdings at launch will be Contemporary Amperex Technology Co (CATL), the world’s largest maker of electric vehicle batteries, followed by Shenzhen Mindray

Last year, Matthew decided to put half his pension into an annuity provided by the wealth manager St James’s Place. But, after the transaction went through, it looked like a chunk of money had just disappeared.

“When I had all the figures, they simply did not add up,” he says. “There was about £4,500 missing.”

Several months later, Matthew, 70, from Oxfordshire, who — like all of the SJP clients in this piece — asked the FT not to use his real name, discovered the lost money was an income tax charge, which neither he, nor his financial adviser, had been expecting. “That is when I threw my toys out of the pram,” he says.

Although he had been happy with the service SJP had previously provided, he said the fact that he and his adviser were surprised by the extra charge was not acceptable.

“I paid SJP quite a lot of money, directly and indirectly, and what I expect for that is really competent advice.”

He was also disappointed with the firm’s reaction which, instead of a giving him a refund, was to send him an unwanted hamper from Fortnum & Mason. 

Before he withdrew his money recently, Matthew was among the nearly one million people whose savings and investments are managed by St James’s Place, the UK’s largest wealth manager. The company, founded in 1991, prospered through the 1990s and 2000s, gaining clients and assets and eventually joined the FTSE 100.

But in the past year the wealth management sector has started to undergo a big shift. New regulations introduced last summer, called the Consumer Duty, shone a light on so-called “client outcomes”, forcing firms to act in good faith towards customers, avoid causing foreseeable harm, and enable customers to pursue their financial objectives.

The impact of this has already been seen as the regulator has begun to “flex its muscles”, says Ben Bathurst, an analyst at RBS Capital Markets.

These regulations have had a major impact on SJP, which was warned by the Financial Conduct Authority last year that the adjustments it made ahead of the Consumer Duty being introduced — a fee cut for around 65,000 clients — did not go far enough. The company then announced an overhaul of its entire fee structure, including the removal of much-maligned exit charges for some products. 

SJP was subsequently forced to set aside £426mn for potential client refunds over claims that some customers did not

Following a historic thaw in relations that has led to a deepening of military ties between South Korea and Japan, the two countries are targeting a new area of collaboration: climate and energy security.

Their governments are stepping up efforts to promote the use of hydrogen and ammonia as emission reduction tools for their industrial and power generation sectors. But the bilateral effort has been heavily criticised by environmental campaigners, who argue it could slow the global transition to renewable energy.

In a meeting in Seoul last month, Japanese prime minister Fumio Kishida and South Korean president Yoon Suk Yeol agreed to accelerate efforts to create a global supply chain for hydrogen and ammonia after unveiling the joint initiative last November.

Japan, which released the world’s first national hydrogen strategy in 2017, wants to use the gas as a “low-carbon” fuel, while Seoul has also set ambitious hydrogen targets, aiming to use it to meet a third of its energy needs by 2050.

Both countries are also promoting ammonia, a compound of hydrogen and nitrogen often used to make fertilisers, as a fuel in coal-fired power stations — to reduce their emissions and extend their operational lives.

“Japan and South Korea have similar challenges in terms of achieving energy security and clean energy, so there is much room for the two countries to co-operate,” says Noriyuki Shikata, Japan’s cabinet secretary for public affairs.

Neither hydrogen nor ammonia, when burnt, generates “end-use emissions” of carbon. But their production is highly energy intensive and environmentalists say neither country’s plan to expand renewable energy generation capacity is ambitious enough to remove carbon emissions from the process.

South Korean president Yoon Suk Yeol (right) and Japanese prime minister Fumio Kishida in Seoul in May © Ahn Young-Joon – Pool/Getty Images

Japan plans to generate up to 38 per cent of its electricity from renewables by 2030, compared with 22 per cent last year and an OECD average of 26 per cent. South Korea, where renewables account for just 7.7 per cent of electricity, last year cut its 2030 renewables target from 30.2 per cent to 21.6 per cent.

Hydrogen produced using renewable energy is commonly referred to as “green” because the process produces no greenhouse gas emissions. But 90 per cent of the hydrogen produced in South Korea, for example, is so-called “grey hydrogen”, which is made from natural gas, releasing carbon dioxide into the atmosphere.

“Green hydrogen, produced using renewable energy, offers