Yves Perrier, chief executive of Amundi, has predicted that China will become one of the €1.6tn French asset manager’s most important markets after it received regulatory permission to begin operating a wealth management joint venture with Bank of China.
Policymakers in Beijing want to accelerate the development of China’s investment industry so they have relaxed or abolished foreign ownership limits on Chinese financial services groups in an effort to attract greater involvement by large international asset management companies.
Amundi BoC Wealth Management is the first joint venture that is majority owned by a non-Chinese partner that has been allowed to design and manufacture wealth management products for sale to mainland investors.
“This new joint venture will accelerate Amundi’s development strategy in China, a country that we foresee as one of our major markets in the coming decade,” said Mr Perrier at an opening ceremony in Shanghai on Wednesday.
Liu Huijin will chair the joint venture after moving from her Hong Kong-based role as deputy-CEO of BoC’s insurance business. Bao Aili will act as general manager after moving from the same role at Everbright Pramerica fund management in Shanghai.
Amundi owns 55 per cent of the joint venture, which is expected to launch its first products by the end of this year.
The new product range will initially comprise of fixed income and multi-asset strategies that invest in Chinese securities to deliver attractive yields with a low to moderate risk profile. The new products will not carry any kind of implicit guarantee against losses.
Chinese regulators have clamped down on the practice of wealth managers offering products with capital guarantees as these contracts have been blamed for excessive risk taking by retail investors.
The joint venture will first serve BoC customers and will make its products available to other mainland distributors and digital platforms, which are helping to drive rapid growth in sales of investment funds to retail investors.
Peter Alexander, managing director at Z-Ben, a Shanghai-based consultancy, said the race by foreign players to access China’s wealth management market was clearly accelerating.
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BlackRock, the world’s largest asset manager, was recently given the green light to form a wealth management joint venture with China Construction Bank and Fullerton, a subsidiary of Temasek, Singapore’s state investment company. Mr Alexander said he expected BlackRock’s wealth management joint venture to be ready for operations within six months.
Vanguard and Ant Group have signed up 200,000 clients in first 100 days after the launch of an investment advisory partnership by the world’s second largest asset manager and China’s dominant mobile payments company.
UBS recently released updated forecasts that estimated that mainland China fund assets will increase from about $4tn in 2019 to $16tn by 2030, providing the single largest growth opportunity available to global investment managers.
This asset growth will create an enormous fee pool, which will multiply fivefold from $22bn a year to $120bn by 2030, according to the Swiss bank. It predicted that foreign players will be responsible for running a third of onshore financial assets by 2030, up from about 16 per cent currently.