On October 26, the Global Wealth Management Forum · 2024 Shanghai Suhewan Conference convened under the theme “Promoting Global Common Development through Financial Cooperation.” The topic of Chinese assets sparked robust discussions among finance executives from around the world. Experts at the conference indicated that the potential for long-term institutional investors to allocate to renminbi assets is expected to expand further.
Michael Levin, Head of Morgan Stanley Investment Management for the Asia Pacific, highlighted the transformative changes in China’s capital markets since the country joined the World Trade Organization in 2001 and implemented the Qualified Foreign Institutional Investor program in 2002. Levin noted that the establishment of stock and bond market connectivity has catalyzed rapid growth, positioning China’s capital markets as the second largest worldwide.
In response to emerging economic challenges, China has recently introduced several new policies. Neil Godfrey, Managing Director and Head of Global Distribution at Abrdn, pointed out that the latest policies from the Chinese government have brought the country back into focus. He emphasized that the synergistic effects of fiscal and monetary policy enhancements have improved economic prospects, generating exciting opportunities for long-term investors due to attractive relative valuations.
Liu Jian, Chairman of Shenwan Hongyuan, echoed this sentiment in his opening remarks, stating that there is a low allocation of equity assets among domestic insurance funds, banks, and wealth management subsidiaries, leading to a necessary rebalancing for foreign investment institutions in A-shares. With favorable factors accumulating, there is significant potential for long-term institutional investors to increase their holdings in renminbi assets.
Foreign asset management firms see new growth opportunities in China amid ongoing green transformation efforts. Niall Quinn, Partner and Global Head of Institutional Business at Pictet Group, remarked that China serves as a remarkable global example in its commitment to carbon reduction and has emerged as the world leader in green technology, spanning areas such as solar panels, wind turbines, and electric vehicle batteries. Quinn also noted that China is restructuring its industries to reduce the share of high-emission manufacturing.
With the backing of national policies and commitments, Pictet Group has bolstered its confidence in the growth potential of environmental opportunities in China, particularly in sectors like green transportation, renewable energy, resource efficiency, and industrial decarbonization. Quinn disclosed that in 2023, Pictet launched a dedicated investment strategy focused on A-shares that directs international investment into leading environmental solution providers in the Chinese market.
In recent years, the China Securities Regulatory Commission has implemented a series of effective reforms aimed at promoting the long-term health of the capital market, enhancing the quality of listed companies, and improving mid-to-long-term returns for investors. Liu Jian highlighted that in 2023, A-share listed companies distributed a record 2.2 trillion yuan in dividends, signaling the gradual formation of a sound ecosystem for long-term investment in China’s capital market. The A-share market is poised to become a significant venue for global capital allocation.
