The Chinese asset management market is growing at breakneck speed. Assets under management (AUM) reached $18 trillion last year and a large number of local entities and partnerships between leading domestic and global firms have been set up to service the burgeoning demand.
Oliver Wyman’s newly published report, From Sandbox to Bridge: The Role of the Greater Bay Area in Connecting China with Global Asset Management. offers several insights into the Chinese asset management industry.
The Greater Bay Area (GBA), consisting of Hong Kong, Macau, and nine cities in China’s southern Guangdong province, provides an important bridge for global asset managers looking to bolster their presence in China. Beijing plans to develop the GBA into an integrated technology, business and finance hub by 2030. The area has a population of over 70 million and holds roughly $462 billion of investable assets, according to the report.
The report presents findings of a survey conducted in Q2 2021 on 2,000 investors based in the GBA. Among the noteworthy results was that 66% of respondents said they prefer foreign over local financial products when the risk and returns are similar, and 70% of wealthy respondents said they were eager to raise their investments in foreign products.
The GBA is expected to be the staging ground for numerous innovative, cross-border asset management opportunities in parallel with existing nationwide quota regimes. The success of these new initiatives in the GBA, which in effect functions as a sandbox for the rest of China, is considered critical to paving the way for their adoption nationwide.
One of the most important of these initiatives, Wealth Management Connect, was launched on 10 September, and according to the report, “has already demonstrated the capability for moving to a broader variety of products and catering for wider investment choices. Compared with other existing schemes, it provides more convenient, direct retail customer access, allowing offshore residents to invest in wealth management products distributed by Mainland Chinese banks in the GBA, and Mainland GBA residents to invest in products distributed by banks in Hong Kong and Macau.”
The report suggests that banks with strong onshore and offshore branches in the GBA would be in the post position to leverage the opportunity provided by Wealth Management Connect. According to Jasper Yip, at partner at Oliver Wyman and one of the report’s authors, this is because “they can support the required operations by enabling cross-border account opening, vetting and transactions, complying with onshore and offshore regulatory requirements, and building centralized and integrated operations.”