China outpaces Hong Kong fund market
China’sfledgling asset management marketplace will eclipse the more established Hong Kong market in size by the end of the year when it will boast US$26.7 billion in retail funds under management (FUM) according to Cerulli Associates.
The US-based research firm says Hong Kong, the oldest retail asset management marketplace in the region outside of Japan, will only reach US$25 billion in assets held by local investors by the same date.
China’s retail fund industry, which at the end of 2002 had US$16 billion in FUM, is also expected to enjoy a five-year compound annual growth rate (CAGR) of 24.3 per cent.
Cerulli says this will see it grow to US$48 billion by 2007.
In contrast, Hong Kong is only expected to show a five-year CAGR of 8.4 per cent, representing an estimated US$32.5 billion in 2007.
Retail investors are expected to play an important role in this growth, with Cerulli estimating that managed funds in China now account for just about 1.5 per cent of total household financial assets in China.
Cerulli says that by 2007, this will have grown to about 3.2 per cent of assets.
Banks are expected to be the main engine of distribution for China’s open-end managed funds, to hold 75 per cent of the market in 2007, down from 86 per cent at present.
The Chinese financial regulator, the China Securities Regulatory Commission, has permitted stockbrokers to sell mutual funds, but in the long-term, Cerulli believes banks are likely to maintain their dominant position.
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