Foreign fund managers not taking full advantage of China, survey shows

Poll by Shanghai-based consulting firm Z-Ben Advisors scrutinised over 100 companies, including J.P. Morgan, UBS and Goldman Sachs.

PUBLISHED : Monday, 18 April, 2016, 5:27pm
UPDATED : Monday, 18 April, 2016, 6:33pm

Some of the world’s top asset managers are not poised to take full advantage of China, which is potentially the strongest growth market for that sector, a study showed.

The survey by Shanghai-based consulting firm Z-Ben Advisors assessed the competitiveness of foreign investment managers in the world’s most-populous nation. They measured over 100 global companies as of the end of 2015 by the amount of business done.

“China is by far, without question, the most robust and prominent business opportunity that exists in asset management space,” Z-Bens managing director Peter Alexander said.

The poll was topped by J.P. Morgan, active in Hong Kong alone for over 90 years as a provider of corporate and investment banking, with a score of 51.1.

That’s versus the full score of 100.

Swiss bank UBS scored of 42.6. Its French rival BNP Paribas ranked 35.7.

They were followed by Invesco and Schroders.

The biggest risk in China is the “unplanned for upside”, Alexander said. “If you are not positioned to take advantage of opportunity, you are going to miss out.”

China’s mainland is one of the most under-represented and under-serviced financial markets in the world, Alexander said. The survey implied a huge potential on offer from China for the best-positioned fund managers.

Assets under management held in mutual funds on the Chinese mainland totalled US$1.3 trillion last year and compares with US$400 billion in 2010. Z-Ben expects that to grow to US$3 trillion by 2021.

The study should fuel determination among smaller firms that China is a market where gains will be large enough to allow them to leapfrog larger competitors, the consulting firm said in a note.

Value Partners, a Hong Kong-based fund manager, ranked 13th and beat New York-based investment bank Goldman Sachs, partly thanks to its “China strategy” and the strength of its inbound business. In other words, it is the offshore-to-onshore business which offers foreign investors access to the Chinese market, the study showed.

Value Partners’ assets under management amounted to US$14.6 billion as at the end of March, according to its filing to the local bourse. Goldman Sachs invested or advised on more than US$1 trillion of assets under management, the firm’s website said.

The competitiveness is not only about size, but also the strategy that managers take, Alexander said.