2020 was another important milestone on China’s journey towards market opening, where we have seen accelerated and expanded reforms including, but not limited to, implementation of the new Qualified Foreign Investors (“QFI”) rules.
Our annual survey takes a closer look at investors’ strategies in China, reflecting on the economic and political climate, their thoughts on different access schemes and how these are continuing to evolve, as well as the challenges and opportunities which lie ahead through the most recent liberalisation wave.
We partnered with Funds Europe to deliver a survey of the dominant trends defining China’s capital market from inbound, outbound and local fund management perspectives. The report highlights the findings of research conducted between June and August 2020, based on responses from 139 participants including institutional investors and asset managers, brokers, custodians, technology firms and compliance, legal or risk managers. These were drawn from Europe, Asia, the Americas and Africa.
The survey provides unique insights on how investors feel about China. Some of its key findings include:
- Investment in China is a long-term strategy for foreign investors, notwithstanding the current global economic slowdown and geo-political tensions, particularly US-China relations. More than 90% of respondents say that the importance of China continues to rise in their investment strategies.
- 59% say they will increase their allocations to Chinese assets during the coming 12 months.
- 65% say the economic and political environment in China is having a primary influence on their investment decisions in China.
- 54% say asset class coverage is the most important factor in selecting an investment 5
channel to access the Chinese market.
- 53% say they have already established a wholly owned foreign enterprise (WFOE) in China or plan to do so in the future.
- 42% of asset managers with a joint venture (JV) in China say that they have taken a majority stake in their JV or will do so in the future. 38% say they do not expect to change their current JV arrangements.
- 38% currently use actively managed mutual funds to provide exposure to China, but this will rise to 63% over the coming two years.
We thank the investment professionals who took part in this survey and who freely shared their valuable insights with us. The landscape of China’s capital market is changing very rapidly, driven primarily by its continuous market-oriented liberalisation measures.
China will continue to push forward with its market-oriented opening up. With this, and with the differences in economic performance and bond yield between the East and West, investment flows into China are expected to accelerate over the coming 12 months.
Consider your investment plans in China, an important and continuously evolving market. Standard Chartered looks forward to partnering with you and continuing to deliver solutions that support and advance your China strategy.