Sustainable investment wave in China to continue, thanks to Beijing’s climate policy support, says Morningstar

The research firm expects to see increasing investment in the long-term growth of decarbonisation-related sectors such as electric vehicles and renewable energy

China saw a sharp jump in the net inflow of money into sustainability-themed funds to US$5.4 billion in the fourth quarter of last year from US$966 million in the third

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A man charges his electric car in Beijing. Photo: Bloomberg

Published: 8:30am, 7 May 2021Updated: 12:39pm, 19 May 2021

A surge of Chinese investment in mutual funds with a sustainability focus driven by money flooding into the electric car sector is likely to be sustained this year, according to funds research and management firm Morningstar.

Major policies announced by Beijing last year to drive decarbonisation in industry will benefit product and solution providers, said Chloe Qu, the Shenzhen-based manager research analyst at Morningstar China.

“As the Chinese government has taken a proactive stance on tackling climate change and announced national policies, [we] expect increasing investor interest in the long term growth of [decarbonisation] related sectors, such as electric vehicles and renewable energy,” she told the Post.

China saw a sharp jump in the net inflow of money into sustainability-themed funds to US$5.4 billion in the fourth quarter of last year from US$966 million in the third, according to Morningstar’s tally of 80 domestic funds with a strong focus on environment, social and governance (ESG) factors.

Adding in the impact of the launch of five new funds and the investment gains of existing products, the assets of ESG funds under management nearly doubled to US$26.5 billion in the three months to December 31.

The figure was US$7.2 billion a year earlier, and US$5 billion at the end of 2018.

Seven of the top 10 sustainable funds, as measured by inflows, during the fourth quarter carried new-energy themes, garnering US$4.8 billion or 88 per cent of the total net investment, Qu said.