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November 14, 2017

China’s AUM to soar to $17trn by 2030

By Saloni Sardana

China’s assets under management (AUM) are expected to grow to $17trn by 2030, paving the way for the country to become the world’s second largest asset market.

This would represent an increase of 507% increase compared to China’s $2.8trn AUM in 2016, according to Deloitte’s practice consultancy Casey Quirk.

Based on Casey Quirk’s forecasts China would lag behind the United States only in AUM value and become the world’s second largest asset management market.

Half the expected asset growth by 2030 would be made up of wealthy Chinese business owners along with retail investors, said the consultancy.

At present, only 4% of this segment’s wealth is invested into asset management products. However, Casey Quirks said this figure would rise to 10% by 2030.

This would generate an $8.5trn of flow in net assets coming into the industry from Chinese investors in the period of 2017-2030.

Business models

Casey Quirk’s head of Asia office, Daniel Celeghin, said: “In contrast to the rest of the world, China is the only large, multi-trillion dollar asset management market that has seen net new flows in excess of 30% on average for the past five years.”

However, Casey Quirk identified a key challenge for global firms hoping to grab China’s market share.

The firm said China’s preference towards its domestic asset classes and the home-country bias along mainland investors that exists in China makes it difficult for international competitors.

How to succeed in China

Celeghin said foreign firms needed to adopt “a successful business model” and “collaborate with a strong local player” in order to win new business in China.

The consultancy identified a number of business models that could help foreign investors grab 70% of China’s market assets by 2030.

This includes:

  • China Champion, which is a dominant local brand that focuses on addressing demand for domestic asset classes.
  • Global Leaderwhich is a top 10 global asset manager by AUM.
  • Pan-Asia Alternatives Specialist, a firm that has expertise in illiquid asset classes across the Asia Pacific region.
  • China Distribution Specialist, an asset manager involved in retail.

HNW and Bespoke Virtual Portfolio Manager were also included in the list of recommendations made by Casey Quirk.

 

 

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