Ambitious asset managers evolve in 'manic fashion'

Rising demand for wealth management tools from individual and institutional investors alike, and expanding financing channels for enterprises, will make China's asset management segment one of the fastest-growing sectors in the global capital market.

China's asset management segment is set to expand fivefold to $17 trillion by 2030, beating growth in other markets and benefitting local money managers, according to a report last week by Casey Quirk, a global consultancy services provider on asset management from the Deloitte stable.

Assets managed by Chinese managers may overtake the $3.8 trillion in the United Kingdom as early as 2019, with domestic firms being the biggest winners, according to the report.

"China is the only large, multi-trillion dollar market that has seen net new flows in excess of 30 percent per year," the report said.

Growing personal wealth and low returns on bank deposits will encourage Chinese investors to allocate more to asset managers, according to the report.

Casey Quirk expects the Chinese industry to attract $8.5 trillion of new assets between now and 2030, accounting for almost half of net inflows to the global industry.

The industry's share of national wealth in the world's second-largest economy will rise to 10 percent by 2030, from 4 percent now, putting it on a par with where the United States was in 1990, the report said.

Much of the growth will be driven by individuals in the "mass affluent" and high net-worth categories, alongside pension and insurance money, Casey Quirk said.

"Perhaps to make up for a late start, China's asset managers have blossomed and evolved in a manic and seemingly haphazard fashion," it said.

"A cacophonous universe of mutual funds, trusts, pension funds, private funds, vaguely defined 'wealth management products' and mobile-only money market funds try to out-do each other, or at least copy the latest hot sellers."

Investors will become more discriminating as the market matures, the report said.

Dominant domestic firms, top-10 global managers, pan-Asia managers expert in illiquid assets, those with an edge in serving retail and wealthy individual clients, and technology-driven firms may win out, it said.

A research note from Sun Life Everbright Asset Management Co Ltd said that wealth management service providers at financial institutions and mainstream banks are going to strengthen collaboration with asset management companies.

Such collaborations would help deepen interactions between asset managers and affluent investors, and meet needs of both parties, in terms of risk tolerance and investment preferences.

A report from Ping An Asset Management Co Ltd said that China's asset management institutions will also deepen collaborations with international players to leverage global resources for their domestic clients.

"It is a trend that as the financial market opens up, more clients will have demand for asset management products in other countries in the future," said the report.