By Erica Fung
During our recently held annual Asia Investment Management Summit, I moderated a lively panel discussion on the five-year outlook for investment management in Greater China.
The panel speakers included Stewart Aldcroft, Chairman of CitiTrust Hong Kong; Eleanor Wan, Chief Executive Officer at BEA Union Investment Management; and Keith Yuen, ex-Regional Vice President, Principal International Asia.
We did not have a crystal ball, but I was interested to see how the panel viewed interest in China from outside the region—particularly with so many channels now available such as QFII, RQFII, CIBM, QDII and QDLP.
Stewart shared his opinion that in Asia, and Hong Kong especially, China is seen as an obvious investment strategy. However, investors based in the U.S. or Europe do not have enough information to make a decisive choice.
He said that when MSCI adds China’s A-shares to its Emerging Markets Index next year, it will be a financial milestone. He believes Chinese stocks could pull trillions of dollars from global markets into its equity markets over the next decade. That will have a significant impact because a substantial portion will be pension money and savings, which are not so heavily traded. This will bring about a degree of stability to the China market.
Eleanor agreed with Stewart to a point, but said her clients are already excited about China. She does not need to sell the growth story of China to European investors and many of her clients are underweighted.
She said her clients realize China is an important market but find it difficult to access from outside the region. However, the market situation can change overnight, and managers need to be able to immediately respond—which is only possible if you are on the ground.
All three panelists agree on the importance of Hong Kong’s connection to China.
Keith said that Chinese companies looking to attract global investment need to set up an overseas office, so Hong Kong is a natural place for them—as a reputable and established financial center. Stewart agreed that China is passing trust to Hong Kong. He said it is easier to gain access to stocks and bonds in Hong Kong and, going forward, there will be other securities available.
Keith also shared insights about investor behavior in China. He explained the Chinese tend to hold a short-term view so a quick to buy and quick to sell approach is prevalent. However, he believes this will change with more investor education. It may take five or ten years, but China’s investors will become like Hong Kong investors in the long term.
If you want to learn more about this panel discussion and how SS&C’s services and software can support your growth in Greater China, please email me at email@example.com.