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China: The World’s Best Opportunity for Asset Managers?
| Foreword: Citi
Since ancient times, the Chinese have referred to their country
as “Zhong Guo,” Mandarin for “Middle Kingdom.” Today, the
meaning is quite appropriate, as turmoil in Europe and anemic
growth forecasts for other developed markets leave many
looking to China as the world’s central growth engine.
Yet, after a roaring start in the frst decade of the millennia, the Chinese asset
management industry has seen its growth stall, even as the local banking
sector mostly avoided the issues that plagued developed markets during the
fnancial crisis. While GDP growth has continued to grow at 8% in recent years,
funds under management today remain some 30% below 2007 levels. At the
same time, the number of funds has almost tripled, and no fewer than 71 fund
management companies are competing fercely for investors, many of whom
prove quite fckle. Meanwhile, declining capital markets have reduced asset
values, further straining the proftability of managed assets.
Citi is proud to partner with Z-Ben Advisors, an independent consultant, in closely
examining the unique features of the Chinese asset management landscape
and its prospects in coming years. Based in Shanghai, Z-Ben is focused solely
on producing research on China, and as such, is well placed to explore the fner
points of the local market.
Key fndings of Z-Ben’s research show that while China’s asset management
industry has taken a brief pause in terms of mutual fund growth, other sectors
have fowered. Assets in private funds have tripled in less than two years’ time;
monthly launches of short-term-oriented bank wealth management products
number in the thousands; and on the institutional side, sovereign and retirement
funds are growing with breakneck speed.
The future of asset management in China remains bright, Z-Ben notes, as the
shift toward a fnancial industry more reminiscent of developed markets is under
way. The pension and insurance sectors offer tremendous promise, given the
need to rise to the challenge of providing for an aging population. Continued
liberalization has increased the size and number of opportunities available
to domestic and foreign players, as witnessed by the recent expansion of the
Qualifed Foreign Institutional Investor (QFII) program.
The long-term prospects of China are almost universally extolled, even if
challenges remain in the short run. As a major provider of services to the
investment community, by sponsoring this research Citi hopes to provide industry
participants with fresh insights, making a complex market easier to navigate.
Neeraj Sahai, CEO
Citi Securities and Fund Services
Foreword: Citi