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China's Asset Management Sector Set To Become World's Second Biggest By 2030

Summary

China's asset management sector on track to see five fold growth over the next dozen years to become world's second largest.

Growth driven by mass affluent and high net worth individuals, as well as pension and insurance funds.

Domestic firms will reap most of the rewards due to their home ground advantage.

The Chinese asset management sector will see five fold growth over the next decade to become the world's second largest by 2030, according to a new report from Deloitte's consulting unit Casey Quirk.

Last year China's asset management market was worth $2.8 trillion, as compared to a market of $33.4 trillion for the US and $3.8 trillion for the UK.

According to Casey Quirk report however, assets under management by Chinese managers are on track to exceed the UK by as early as 2019, before eventually rising to $17 trillion by 2030.

The report said that rapid expansion in the "mass affluent" and high net-worth categories, as well as inflows from pension and insurance funds, are driving frenzied growth in the Chinese asset management space.

"Perhaps to make up for a late start, China's asset managers have blossomed and evolved in a manic and seemingly haphazard fashion," said the report.

"A cacophonous universe of mutual funds, trusts, pension funds, private funds, vaguely defined 'wealth management products' and mobile-only money market funds try to out-do reach other, or at least copy the latest hot sellers."

China is expected to draw $8.5 trillion of new assets from now until 2030, accounting for nearly half of all global new inflows.

This will raise the asset management sector's share of China's national wealth to 10% from 4% at present, which is where the US industry was positioned in 1990.

The report said that domestic firms will reap most of the benefits from surging growth in China's asset management sector due to their home ground advantage, while foreign players can expect to grab a mere 6% market share.

"China is the only large, multi-trillion dollar market that has seen net new flows in excess of 30% this year," said the report.

"The pronounced Chinese bias for domestic assets classes favours local firms [whose] sustained presence, entrenched distributor relationships and extensive brand-building efforts all add up to a clear advantage which foreign firms will have trouble replicating."