China’s Mutual Funds Industry Now the Second Biggest in Asia (The Asset)

The Asset has recently noted that the East Asia mutual funds industry had an impressive 2015 run that saw industry assets in the region grow to US$4.2 trillion or 11% of the total global mutual funds market. In fact, the East Asia market has doubled over four years from US$2.3 trillion in assets under management (AUM) with China’s mutual funds industry leading the way to become the second largest mutual funds market in the Asian region with a 2015 AUM of US$1.3 trillion.

Li Huang, associate director at Fitch Ratings, was quoted by The Asset as saying:

“Chinese money market funds (CMMF) has been a main contributor for the growth of Chinese mutual funds in recent years. CMMF has experienced substantial growth since the second half of 2013 driven by the demand for e-commerce money market fund. The growth of Chinese mutual funds is supported by the expanding middle class, high savings rate and large amount of bank deposits. The mutual recognition scheme [MRF] is still at early stage and it did not drive the growth last year.”

However, there are challenges for both fund managers and Chinese investors:

“Chinese asset managers are aware of the challenges and some of them are working on it by enhancing the IT platform/operations and reinforcing resources… As the majority of [Chinese] investors are retail, it is still challenging for them to differentiate.”

In another article, The Asset noted that investor confidence is returning to the Chinese stock market despite recent market volatility as evidenced by the 11.3% increase in asset under management (AUM) of securities firms in China in the first quarter this year. However the value of mutual funds dropped to US$1.19 trillion in the period from US$1.28 trillion as of end 2015.

Yang Rong, an analyst from China Securities, was quoted as saying:

“It is likely that the average rate of return of financial products in 2016 will continue to decline due to lack of good investment choices and as a result, the demand for high yield assets will rise.”

For now, CITIC Ltd (OTCMKTS: CTPCY) is the largest securities firm at US$189 billion and a 74% increase in 2015 profit. US investors looking to tap into the growing wealth management sector could look at Noah Holdings Limited (NYSE:NOAH) – a wealth management service provider with a focus on global wealth investment and asset allocation services for high net worth individuals and enterprises in China.

To read the whole article, East Asia mutual fund market doubles on China, outlook bright and China to see a boom in securities services, go to the website of The Asset. In addition, check out our China closed-end fund list and China ETF list pages.

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