Chinese Wealth Management Must Go Global

(Picture: Shutterstock)

(Picture: Shutterstock)

Only 5 percent of the assets of high-net-worth individuals in China are allocated overseas, compared with the global average of 24 percent. Experts emphasise that Chinese wealth management should g0 more global. 

China should speed up the transformation of its wealth management sector by turning it from being mostly focused nationwide, to being more receptive to global asset allocation, Yang Zhiyu, Deputy Head of the asset management department of Industrial and Commercial Bank of China said a recent industry forum in Guangzhou.

Pan Dong, deputy head of asset management at China Everbright Bank, agreed with Yang that the proportion of overseas asset allocation was too small in China, which was unreasonable in terms of asset allocation given the fact that the renminbi was depreciating against the dollar.

Big Challenges For Commercial Banks

«Despite China's tightening of its foreign exchange regulations and our lack of knowledge about overseas markets, we must build a team to study the financial markets of other countries,» she said according to an article in the newspaper «China Daily». «At the same time, we should look for excellent investment managers overseas for cooperation,» she added.

Commercial banks faced big challenges they had not experienced before in terms of their wealth management business,» Yang Zaiping, executive vice-president of the China Banking Association, said. After China has fully liberalized its interest rates, he said, more than one-third of the banking sector's wealth management products, offering market-based interest rates that used to be higher than deposit rates, will lose their appeal to clients.

Increasing Exposure to Risks

Furthermore, as China is undergoing a process of deleveraging and a reduction of excess capacity in traditional industries amid an economic slowdown, investment returns in the real economy were falling, while financial risks were on the rise. Yang Zaiping said this has led to a drop in average rates of return for banks' wealth management products from 6 percent to around 3 percent.

The regulators were placing greater emphasis on control over financial risks. This, he said, was due to an increasing exposure to risks triggered by a growing number of financial products such as peer-to-peer lending, the practice of direct lending between unrelated individuals via internet platforms.

Up More Than 50 Prozent

At the end of 2015, the balance of wealth management products held by the banks totalled 23.5 trillion yuan ($3.6 trillion), up by 56 percent year-on-year. That accounted for 26 percent of the total balance of 90.36 trillion yuan for wealth management products held by various kinds of financial institutions, according to «China Daily».


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