Institutional Asset Manager news update - "China: The jewel in the asset manager’s crown?"

China: The jewel in the asset manager’s crown?

China’s aggressive foreign policy stirred up controversy this week, as trade sanctions were placed on Australian exports and skirmishes in the South China Sea continued to raise tensions with its neighbours. Relations with the US are also not expected to see great improvements as President Elect Joe Biden takes office in the new year.
None of this has dented the ambitions of global asset managers as they vie for a foothold in the USD2.6 trillion Chinese mutual funds market. Swiss money manager Pictet Asset Management joined BlackRock, Fidelity International and Vanguard in setting up shop in Shanghai since market liberalisation in April.
Investors see China’s growth as too important a trend to miss out on, with President Xi Jinping recently proposing to double the size of China’s economy by 2035 at a Communist party conference.
Legendary China investor Jack Perkowski, who invested USD400 million in the country in the 1990s, says that the country remains the biggest opportunity in the world, but warns that tough competition from local and foreign investment managers will present an uphill battle for asset managers entering the country.
There are also positive signs that investors want a more diverse range of fund options, to broaden China’s retail market which is dominated by safe-haven money market funds. China’s first ever negative yielding bond was more than four times oversubscribed at its launch last Friday.
Globally, fixed income has continued to attract investors away from riskier equity funds, with bond funds garnering an extra USD220.5 billion in inflows in the last quarter.
China’s growth could be scuppered, according to separate reports from the FSB and Pictet, as the country is in line to feel climate change’s worst effects this century. Rising global temperatures could slash asset prices and China could wind up being 25 per cent poorer by the end of the century.
Meanwhile, China’s rising asset management centre doesn’t appear to be causing Europe too much pain yet, where assets under management are expected to hit another “historical height” by the end of 2020.
Madeleine Taylor
Editor, Institutional Asset Manager
[email protected]

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