Shanghai occupies a place in the global asset management center, maintaining sixth place
On September 4th, the 2023 Global Asset Management Center Evaluation Index, compiled by the China Europe Lujiazui International Financial Research Institute, was officially released. Shanghai maintains its sixth position as the global asset management center, fully reflecting the fundamental advantages and endogenous resilience of the Shanghai market, with New York, Paris, and London ranking in the top three.
Compared to 2022, the ratings and rankings of asset management centers in the Eurozone have generally increased due to the impact of capital flows and the level of investment in the ESG sector, while the Asian region has experienced a decline. New York still leads the global asset management center with an absolute advantage, while Paris leaps into the top three and narrowly surpasses London. Under economic uncertainty, global demand for risk hedging products continues to rise, with Chicago further rising to fourth place on the basis of 2022, and Singapore slightly declining by one place to fifth place. Frankfurt has attracted funds from London in the stock and bond markets, and has also received huge net inflows in ESG and alternative asset sectors, jumping to seventh place, tied with Boston. Tokyo rose slightly to ninth place. Affected by the shrinking market value of the stock market and the net sales of funds, Hong Kong fell to tenth place.
Thanks to the continuous opening of the Shanghai asset management market, Shanghai has maintained a certain level of competitiveness in global asset management centers. Firstly, the structural reform of the financial supply side continues to enrich the supply of underlying assets. In the first half of 2023, Shanghai is the global asset management center with the largest number of IPOs, and has listed 30-year treasury bond bond futures, aluminum oxide futures, synthetic rubber futures and options, and freight index futures and other derivatives. Meanwhile, the top asset management firm AuM has grown against the trend. As of June 2023, the top five asset management institutions based in Shanghai, AuM, have achieved a year-on-year growth rate of 23%, ranking among the top in the world. Numerous foreign financial institutions are still intensifying their layout in the domestic market. China has long formed an indirect financing financial system dominated by commercial banks, with limited competition from foreign investment. Shanghai has become one of the preferred channels for foreign asset management institutions to enter China by supporting the establishment of joint venture wealth management companies between commercial bank wealth management subsidiaries and foreign institutions. Moreover, Shanghai's policy resources continue to be abundant. Shanghai became a pilot city for the integration of domestic and foreign currency fund pools for multinational corporations in July 2022; In August of the same year, it became one of the first pilot projects for climate investment and financing; As of June 2023, Shanghai has 59 QDLPs and 86 QFLPs.
The index report believes that the transformation of bank wealth management net worth is the biggest challenge and also contains great opportunities in the current Chinese asset management market. In the first half of 2023, the scale of net worth wealth management products in China reached 24.3 trillion yuan, accounting for 96%, and the standardized transformation of wealth management business achieved significant results. In the short to medium term, the decline in bank deposit interest rates and the adjustment of resident allocation structure will bring incremental funds to the bank wealth management market; The structural reform of the financial supply side has brought incremental investment targets to the bank wealth management market.
As the proportion of alternative assets in global asset allocation increases, in March 2023, the China Development and Reform Commission and the China Securities Regulatory Commission issued documents to expand the scope of REITs issuance and accelerate the normalization of REITs issuance. The pilot scope of public REITs on the Shanghai Stock Exchange has further covered the new energy sector, with a year-on-year increase of 1.7 times in quantity and a market value increase of up to 70%, showing an accelerating catch-up trend in Asia.
The report also points out that China needs to manage a large amount of assets, second only to the United States, but the asset management industry in China is still very young. With the acceleration of personal pension business, the second and third pillar pension assets are expected to grow to RMB 15 to 21 trillion by 2030, providing huge market opportunities for global asset management companies. At the same time, a greater diversification of investment varieties in pension products, including more access to overseas products, will help Chinese pension depositors obtain stable and long-term risk adjusted returns.
