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China asset management industry seen to hit US$30 trillion by 2023

By Asia Asset Management  
Nov 11, 2019

China’s asset management industry is expected to grow to as much as US$30 trillion by 2023, almost double from the end-2018 level, as trust companies and wealth management divisions of banks transform into professional managers, according to US consulting firm Oliver Wyman.

The industry had $16.3 trillion of assets under management at the end of last year. The figure will probably grow an average 10% per annum over the next five years, reaching $25 trillion-$30 trillion by 2023, Oliver Wyman says in a report on November 8.

This growth is expected to be fueled by the transformation of so-called quasi managers – such as trust companies and the wealth management divisions of banks, securities, and futures firms – into professional managers.

The report notes that Chinese lenders are actively setting up wealth management units to replace legacy wealth management products, and shifting their focus to standard assets such as stocks, away from loans and bonds sold by uninsured and unregulated financial institutions.

And the trust companies that were historically the channels for such shadow banking products are also now transforming into family trusts.

According to Jasper Yip, a principal at Oliver Wyman, this “professionalisation” has been growing rapidly over the past two years, and the change in the product mix helps to boost the capacity of China’s asset management market.

“The subsidiaries’ product scope moved away from quasi fixed income investment products to more capital market based products,” Mr. Yip tells Asia Asset Management, adding that some foreign banks in China are also following suit to diversify their range of products.

The asset management industry’s growth is also expected to be bolstered by investors shifting from investments that are managed internally by financial institutions into mutual fund products, and greater outsourcing of investments, the report says.