Chasing a pot of gold
Foreign financial firms are looking to tap into China's vast pool of savings.
Do they stand a chance against home-grown managers?
Zhang kun is the rock star of Chinese fund management. His name often makes headlines; whole articles are dedicated to his investment calls. Investors vie to get into his funds, one of which has reportedly delivered a return of 700% since it was launched eight years ago. He is among a growing number of managers who generate more hype than the firms that employ them. With personalities like Mr Zhang on its payroll, e-Fund, a state-owned investment group, hardly needs to advertise.
Now a swathe of foreign firms hopes to take on Mr Zhang and his ilk by entering China's asset-management industry. Last month Goldman Sachs, a Wall Street bank, announced a wealth-management venture with icbc, China's largest commercial lender by assets. BlackRock, a giant American asset manager, will join forces with China Construction Bank (CCB). Amundi, a French firm, has linked up with Bank of China and Schroders, a British investment group, with China's Bank of Communications. In March JPMorgan Asset Management said it would buy a 10% stake in China Merchant Bank's wealth business. Nearly 20 global investors are setting up fundmanagement firms; others are launching private securities funds.
The prize is access to a pot of money worth 120trn yuan ($18.8trn), which includes investments made by everyone from the average saver to the ultra-rich in mutual funds, trusts, wealth and other asset-management products. Though the pool of funds is smaller than in the West—asset managers in North America oversaw $59trn last year, according to PWC, an accounting firm—it is expected to expand rapidly. As more people grow comfortable giving their money to managers instead of picking stocks or buying property, China's pot could nearly treble, hitting 320trn yuan by 2030, reckons Oliver Wyman, a consultancy. But foreigners' attempts to crack other parts of China's financial market have yielded underwhelming results. Could this time be different?