ASSET MANAGEMENT IN CHINA 2017 Transitioning Under a New System Overview & Methodology In its 12th iteration, this report focuses on one of the biggest and most dynamic asset management markets in the region China. It examines regulatory developments and their effect on the asset management industry, key retail product and distribution developments, institutional demand, and cross-border product and distribution opportunities. This report includes two 24-page strategic overviews to supplement the full report. The 1Q 2017 Strategic Overview is available in April 2017, and the 2Q 2017 Strategic Overview is available in June 2017. Data comes from proprietary surveys of asset managers in China, and more than 30 interviews with asset managers, distributors, regulators, and other industry executives. Benefits: y Understand the key trends in China s asset management industry and potential strategies for foreign asset managers y Analyze the onshore exposure of existing wholly foreign-owned enterprises y Assess the competitive landscape of China s asset management industry focusing on foreign managers entry routes y Review China s retirement market and assess opportunities for managers in this sector Questions Answered: y What are the industry trends asset managers should take note of? y How should managers align their business strategies with the evolving regulatory system? y What are the routes that foreign asset managers can take to access the China market, and how can managers stand out from the intense competition? y What is the landscape of China s retirement market and how can managers access it? y How has fintech developed in China s asset management space? SUBSCRIPTION DETAILS $19,000 PURCHASE INCLUDES y Digital copy and hardcopy in color y Online access to 11 related reports y Unlimited online firm-wide access y Exhibits in Excel y Key findings y Analyst support y Interactive Report Dashboards NEW y Executive Summary Video NEW RESEARCH INCLUDED WITH SUBSCRIPTION y 9 years of The Cerulli Report - Asset Management in China y 2 years of The Cerulli Report - Asset Management in China & India For more information, contact us: ``info@cerulli.com ANNUAL 143 PAGES 78 EXHIBITS Cerulli Interactive Report Dashboards NEW Experience Cerulli s digital analytics platform and explore interactive data from this report We are pleased to include these interactive report dashboards with your subscription: 1. Chinese Mutual Fund Market Overview: Examine assets under management by investment objective, net new flows, net new flows by investment objective, and distribution channel. 2. Chinese Institutional Market Overview: Analyze investable assets by institution type and institutional addressable assets in China. 3. Chinese Financial Products Landscape: Compare the Chinese product landscape by institutional/high-net-worth investors and mass-retail investors. CERULLI ASSOCIATES info@cerulli.com www.cerulli.com
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Chapter 2 Regulatory Restructuring Exhibit 2.05 China s Financial Regulatory Structure Source: Cerulli Associates State Council Financial Stability and Development Committee People's Bank of China (PBoC) State Administration of Foreign Exchange (SAFE) Monetary policy Macro-prudential management China Banking Regulatory Commission (CBRC) China Securities Regulatory Commission (CSRC) China Insurance Regulatory Commission (CIRC) Banks, trusts, four financial asset management companies, non-bank deposit financial institutions, P2P, etc. Securities companies, futures companies, fund management companies, exchanges, Asset Management Association of China (AMAC), etc. Insurance companies, insurance asset management companies, Insurance Asset Management Association of China (IAMAC), etc. 30 The Cerulli Report Asset Management in China 2017
Table of Contents Table of Contents: Expanded Methodology... 11 Executive Summary... 13 Key Questions Answered... 14 1. What key industry trends in China in 2017 should asset managers take note of?...14 2. How should managers align their business strategies with the evolving regulatory system?....15 3. What is the competitive landscape like for foreign asset managers?...16 4. What is the state of China s retirement market and how can managers access it?....17 Exchange Rates.... 18 Exchange Rates...18 Chapter 1: Overview of Key Asset Management Trends in China... 19 Exhibit 1.01 Chinese Asset Management Industry Snapshot, 2014 2Q 2017....20 Exhibit 1.02 Approved List of Public Funds of Funds, September 2017...21 Exhibit 1.03 Products of Fund Management Companies and Private Fund Companies, June 2017...22 Exhibit 1.04 Robo-Advisors in China...24 Exhibit 1.05 Snapshot of Portfolios and Subscribers to NetEase Dr.8, September 2017...25 Chapter 2: Regulatory Restructuring............................................................ 26 Exhibit 2.01 Banks Wealth Management Product Assets Under Management, 2014 2016...26 Exhibit 2.02 Breakdown of China s Asset Management Industry, 2016....27 Exhibit 2.03 Two Examples of Closed-Loop Investment of Banks Assets...28 Exhibit 2.04 Key Decisions Made at National Financial Work Conferences, 1997 2017...29 Exhibit 2.05 China s Financial Regulatory Structure...30 Exhibit 2.06 Timeline of Key Regulatory Efforts in China s Asset Management Industry, July 2016 July 2017...31 Exhibit 2.07 Example of How a Fund Management Company s Business Can Be Split into Different Subsidiaries...34 Chapter 3: Competitive Landscape.... 37 Exhibit 3.01 Chinese Mutual Fund Assets Under Management by Manager Type, 2011 June 2017...38 Exhibit 3.02 Largest 20 Mutual Fund Managers in China, June 2017...39 The Cerulli Report Asset Management in China 2017 7
Table of Contents Exhibit 3.03 Largest 20 Wholly Local Mutual Fund Managers in China, June 2017...41 Exhibit 3.04 Chinese Qualfied Domestic Institutional Investor Funds, 2008 2Q 2017...42 Exhibit 3.05 Companies With Funds Approved or Pending Approval on the Mutual Recognition of Funds Scheme, August 2017....44 Exhibit 3.06 Wholly Foreign-Owned Enterprise License Holders and Their Other Businesses, September 2017....45 Exhibit 3.07 Chinese Private Fund Industry Snapshot, 2014 June 2017...47 Exhibit 3.08 Number of Registered Private Fund Managers by Type and Size, August 2017...48 Exhibit 3.09 Process to Launch Private Funds Through Wholly Foreign-Owned Enterprises in China...49 Chapter 4: Pensions... 50 Exhibit 4.01 Chinese Demographics, 2001 2030E...51 Exhibit 4.02 Chinese Retirement Market Size, 2012 2016....52 Exhibit 4.03 List of Qualified Onshore Fund Managers for Chinese Pension Business, August 2017....53 Exhibit 4.04 Snapshot of the First Pillar of the Chinese Pension System, 2017...55 Exhibit 4.05 Selected Chinese Retirement Scheme Returns, 2012 2016...56 Exhibit 4.06 Snapshot of the Second Pillar of the Chinese Pension System, 2017...57 Exhibit 4.07 Chinese Pension Insurer Assets Under Management and Assets Under Entrustment, 2012 2Q 2017...59 Exhibit 4.08 Chinese Pension Insurer Assets Under Management and Assets Under Entrustment by Company, 2016 2Q 2017....60 Exhibit 4.09 Snapshot of the Third Pillar of Chinese Pension System, 2017....61 Chapter 5: Retail Business... 64 Exhibit 5.01 Chinese Mutual Fund and Exchange-Traded Fund Assets Under Management, 2012 2Q 2017...65 Exhibit 5.02 Breakdown of China s Assets Under Management by Sector, 2015 2Q 2017...66 Exhibit 5.03 Chinese Open-End Mutual Fund Assets Under Management by Investment Objective, 2012 2Q 2017...68 Exhibit 5.04 Chinese Open-End Mutual Fund Net New Flows by Investment Objective, 2012 2Q 2017 YTD...69 Exhibit 5.05 Chinese Mutual Fund Assets Under Management by Investor Type, 2014 2016...70 Exhibit 5.06 Chinese Mutual Fund Assets Under Management by Distribution Channel, 2014 2016...71 Exhibit 5.07 Chinese Fund Management Industry Entrants, Exits, and Expansions, August 2016 July 2017...73 Exhibit 5.08 Cerulli Asset Manager Survey Respondents Biggest Concerns for China s Retail Business, 2017....75 Exhibit 5.09 Cerulli Asset Manager Survey Respondents Views on Product Features That Appeal to Retail Investors in China, 2017...76 Exhibit 5.10 Fundraising Results of New Funds Launched in China, 2016 2Q 2017 YTD...77 Exhibit 5.11 Chinese Mutual Fund Management Company Open-End Product Application Status, July 2017...78 Exhibit 5.12 Chinese Mutual Fund Fees and Distribution Charges, 2016...79 Exhibit 5.13 Largest 20 Mutual Fund Managers in China, 2016 2Q 2017...80 Exhibit 5.14 Fully Operational Joint Venture Assets Under Management, 2016 2Q 2017...82 8 The Cerulli Report Asset Management in China 2017
Table of Contents Chapter 6: Institutional Business... 85 Exhibit 6.01 Largest 10 Chinese Institutional Investors by Assets Under Management, 2017....87 Exhibit 6.02 Chinese Institutional Investable Assets, 2012 2016............................................................ 88 Exhibit 6.03 Chinese Institutional Addressable Assets, 2016 2021E...89 Exhibit 6.04 Chinese Discretionary Assets Breakdown, 2012 June 2017...90 Exhibit 6.05 Chinese Discretionary Assets by Fund Management Company and FMC Subsidiary, 2Q 2017...91 Exhibit 6.06 Snapshot of the Chinese Pension System, 2017...93 Exhibit 6.07 Chinese National Social Security Fund Assets by Management Type and Annual Return, 2012 2016....94 Exhibit 6.08 China s Enterprise Annuity: Investment Management Licensees, 2015 1Q 2017...96 Exhibit 6.09 Chinese Enterprise Annuities Average Management Fees and Assets Under Management by Product Type, 2015 2Q 2017...98 Exhibit 6.10 The People s Bank of China s Foreign Exchange Reserves, 2012 June 2017...99 Exhibit 6.11 CIC International s Global Investment Portfolio, 2012 2016...100 Exhibit 6.12 CIC International s Global Investment Portfolio by Investment Objective, 2012 2016...101 Exhibit 6.13 Chinese Life Insurance Total Premiums, 2012 June 2017 YTD...102 Exhibit 6.14 Largest 10 Chinese Life Insurance Companies by Premiums, 2015 June 2017 YTD...103 Exhibit 6.15 Chinese Life Insurance Company Investable Assets, 2012E June 2017E....104 Exhibit 6.16 List of Insurance Asset Management Companies, July 2017...106 Exhibit 6.17 List of Insurance Companies Obtaining Approval for Overseas Investment, 2013 July 2017...108 Exhibit 6.18 Chinese Total Foreign Investments, 2012 March 2017...109 Chapter 7: Competing Products.... 110 Exhibit 7.01 Snapshot of Selected Financial Products in China, June 2017...111 Exhibit 7.02 Performance of Banks Wealth Management Products, August 2016 July 2017...112 Exhibit 7.03 Registered Private Funds in China, August 2016 July 2017...113 Exhibit 7.04 Chinese Trust Assets Under Management and Asset Breakdown, 3Q 2015 2Q 2017...114 Exhibit 7.05 Securities Firms Assets Under Management by Plan Type, 3Q 2015 2Q 2017...116 Exhibit 7.06 Growth of Online Peer-to-Peer Products, January 2016 July 2017...117 Exhibit 7.07 Chinese Investment-Linked Product Assets Under Management by Asset Class, 2012 2016........................ 118 Exhibit 7.08 Asset Management Products Launched by Futures Companies, July 2016 June 2017...119 Chapter 8: Cross-Border Schemes... 120 Exhibit 8.01 Channels for Accessing Onshore Investments in China...121 Exhibit 8.02 Total Qualified Foreign Institutional Investor Quota Awarded by Year, 2003 July 2017 YTD...122 Exhibit 8.03 Qualified Foreign Institutional Investor Quota by Institution Type and Region, June 2016 June 2017....123 The Cerulli Report Asset Management in China 2017 9
Table of Contents Exhibit 8.04 Renminbi Qualified Foreign Institutional Investor Investment Quota by Geography and Number of License Holders, July 2017...124 Exhibit 8.05 Comparison of Pilot Outbound Schemes Across Selected Pilot Cities...126 Exhibit 8.06 Part 1. Shanghai-Hong Kong Stock Connect Trade Flows, August 2016 July 2017....127 Exhibit 8.06 Part 2. Shenzhen-Hong Kong Stock Connect Trade Flows, December 2016 July 2017...129 Exhibit 8.07 Hong Kong-China Mutual Recognition of Funds: List of Approved Northbound and Southbound Funds, July 2016 August 2017...131 Exhibit 8.08 Mutual Recognition of Funds Net Capital Flows, January 2016 July 2017...133 Appendix... 134 Exhibit A.01 Hong Kong-China Mutual Recognition of Funds: Northbound Fund Application Status, August 2017....134 Exhibit A.02 Hong Kong-China Mutual Recognition of Funds: Approved List of Southbound Funds, August 2017...135 Exhibit A.03 List of Fund Managers and Bank Custodians With NSSF Mandates, August 2017....137 Glossary... 139 Index of Companies... 141 10 The Cerulli Report Asset Management in China 2017
Index of Companies ABCI Asset Management... 125 Aberdeen Asset Management... 22, 37, 43 AEGON-Industrial Fund Management... 40, 64 Alibaba...13, 22, 23, 64, 117 Alinda Capital Partners... 101 Alipay... 71, 72 Allianz...43 Amundi... 43, 131 AnBang Insurance... 103 Ant Financial...64, 71, 117, 132 Antarctica Capital... 101 Ashmore-CCSC Fund Management...84 Baidu... 104 Bank of China Investment Management... 40, 43 Beijing Chang an Group...74 BlackRock... 40, 43 BNY Mellon...49 Bosera... 54, 64, 88 CCB Principal... 33, 36, 40 China Asset Management...35, 40, 54, 65, 88 China Construction Bank (CCB)...40 China International Fund Management...40 China Investment Corporation (CIC)...100, 101, 109 China Life... 59, 101, 103, 104 China Merchant Bank (CMB)...23, 111, 113 China Pacific... 103, 104 China Post & Capital Fund...74 China Post & Capital Fund Management...74 China Universal Asset Management... 35, 65 CIB Fund Management...40 Citibank...43 CITIC Securities... 116 Creditease... 110, 113 Dacheng Fund Management... 54, 88 Deutsche Asset Management...38 The Cerulli Report Asset Management in China 2017 141
Index of Companies East Money...71 Fidelity... 13, 22, 43, 44, 47, 48, 67 Fortune SG Fund Management...42 Franklin Templeton...43 Fullerton Fund Management...13, 22, 44, 47 Fullgoal...81 Funde Sino Life... 103 Guohua Life... 118 Harvest Fund...33, 38, 40, 43 Hong Kang Life... 118 HSBC...43 HSBC Global Asset Management... 43, 62 HSBC Jintrust...62 ICBC Credit Suisse Asset Management...33, 38, 40, 81 Industrial Bank...40 InterPark... 101 Invesco Great Wall Fund Management...40 J.P. Morgan... 16, 37, 40, 43, 132, 133 JD Finance... 13, 64 Juaicai Plus...23 Legg Mason...43 Lufax... 110 Man Group...13, 22, 44, 47 Mirae Asset...44 NetEase...23 New China Life... 103 Noah Holdings... 113 Penghua Fund Management...40 Pictet...43 Ping An... 23, 40, 59, 103, 110 Ping An UOB Fund Management... 40, 81 Pintec...23 Principal Financial Group...40 Rongtong Fund Management...40 Russell...65 Schroders... 43, 44 Shanxi Trust and Investment Corporation...62 Société Générale... 33, 74 142 The Cerulli Report Asset Management in China 2017
Index of Companies Standard Chartered Bank...43 Taikang...58, 120, 122 Taiping Fund Management...84 Taiping Life... 103 TI Private Investments... 101 Tianhong Asset Management...21, 33, 64, 132 TianTian Fund...72 Total Invest Group Asset Management... 125 Truvalue Asset Management...79 UBS Asset Management...13, 22, 44, 47 Value Partners... 44, 49 Warburg Pincus... 33, 42, 74 WeChat... 22, 71, 132 Xuanji...23 Yinhua Fund Management... 54, 88, 131 Zeal Asset Management... 132 Zhong Ou Asset Management...74 The Cerulli Report Asset Management in China 2017 143