UK money manager M&G eyes China partnerships to meet investor demand for diversification from mainland assets, CEO Pinto says
- The MSCI Emerging Markets excluding China Index has gained 1 per cent this year, while the MSCI World Index added 3.5 per cent and MSCI China lost 2.5 per cent
- ‘There is an increasing demand for diversification from domestic Chinese customers,’ CEO Joseph Pinto says in an interview
UK money manager M&G Investments is actively exploring opportunities to enter China’s US$18 trillion fund management market, aiming to be the platform for diversification, a role abandoned by some rival firms over the past few years.
The strategic move aligns with the London-based company’s decision to expand its presence in Asia through local partnerships, given the search by mainland investors for fresh opportunities in markets outside the country, according to CEO Joseph Pinto.
“There is an increasing demand for diversification from domestic Chinese customers,” he said in an interview. “They want to have fewer domestic products and more international products, and we are exploring potential collaborations, leveraged on our capabilities, to meet the needs of these customers.”
M&G Investments, a unit of M&G that managed £313 billion (US$389.8 billion) of assets at the end of 2023, is currently exploring the idea, Pinto added. Various collaboration options, including ventures with Chinese firms seeking global partners, are on the table, he added.
Chinese investors, having lost billions in an unprecedented four-year losing streak, could do with some of the huge returns seen in India, Japan and the US. As Beijing took steps to stabilise the US$9 trillion market, local investors may be ready to spread their bets.
The MSCI Emerging Markets excluding China Index has risen 1 per cent this year, while the broadest MSCI World Index added 3.5 per cent and MSCI China lost 2.5 per cent. Last year, the two gauges surged by more than 20 per cent, while the China benchmark slumped 13.3 per cent.
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“Initial demand is likely to arise from fixed income, specifically for investment-grade fixed income, as it is perceived as a safer alternative to equities,” Pinto said. M&G provides diversified portfolios to its clients, he added.
Pinto joined M&G Investments in March last year from French asset management firm Natixis, taking charge of all investment capabilities, including equity, fixed income, multi-asset, private and alternative asset strategies.
China’s asset management industry is a 130 trillion yuan (US$18 trillion) business, which is projected to reach 280 trillion yuan by 2030, according to a McKinsey & Co report in May last year. The expansion of individual wealth and pension schemes will drive fund companies to upgrade their products and capabilities, it added.
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Since 2006, the firm has been expanding its business in key Asian markets, with Hong Kong, Singapore, Taiwan, Japan, Australia, and South Korea its priorities, Pinto said.
Last year, M&G Investments secured a licence to establish a new office in Taipei as part of its growth strategy in Asia. It also has a big real-estate investing team in Singapore, its headquarters in Asia, that employs two-thirds of its 150-person staff in Asia.
“We have experienced accelerated growth over the past years,” Pinto said. “We have been building our investment capabilities in Asia.”
Additional reporting by Li Jiaxing
