Business

　　Bank of Montreal has agreed to increase its stake in a Chinese fund management company to become one of its three biggest shareholders. The Canadian lender is seeking to expand its role in a mutual fund market that has already sold more funds this year than all of last year.

　　Canada's fifth-largest bank will raise its stake in Fullgoal Fund Management Co Ltd to 27.775 percent from its current 16.67 percent, the Shanghai-based fund management company said in a statement yesterday.

　　The value of the purchase or from whom the stake was purchased, was not revealed.

　　The deal is pending approval from the China Securities Regulatory Commission, the stock market regulator.

　　"This means that foreign investors are bullish on China's fund management sector in belief that fund management companies will become the major force to dominate the stock market," said Wu Jie, an official from a local Sino-foreign joint-venture fund management company.

　　Under the deal, Bank of Montreal will have greater access to China's nascent fund management industry which started in 1999 and now has more than 160 billion yuan (US$19.28 billion) in total assets under management. Foreign investors are not allowed to own more than one third of a joint-venture fund management firm.

　　The boom in the sale of mutual funds in China is a result of a regulatory incentive to encourage institutional investors to play more on the decade-old equity market.

　　To date, investors have bought about 85.29 billion yuan of mutual funds this year, surpassing the 67.85 billion yuan total last year.

　　After its stake increase, Bank of Montreal will become one of the three biggest shareholder of Fullgoal Fund Management, together with Haitong Securities Co Ltd, the country's biggest brokerage house in terms of capital base, and Shenyin and Wanguo Securities Co Ltd.

　　The two securities firms will each hold 27.775 percent of Fullgoal Fund Management, with Shandong International Trust and Investment Co Ltd holding 16.675 percent.