Schroders, BNP Paribas among foreign firms rushing to tap China’s US$18 trillion wealth-management opportunity

British investment manager Schroders to launch the first batch of funds in China this year, company executive tells the Post, as it receives fresh public fund licence
BNP Paribas and Agriculture Bank of China launch wealth-management joint-venture as regulator vows consistent and continued financial opening

Banking & finance

Iris Ouyangin Shenzhen

Published: 10:00am, 11 Jun 2023

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Schroders plans sales of its first batch of fund products in mainland China this year, after it received a fresh licence to operate a wholly foreign-owned public fund-management company, as international fund managers accelerate expansion into the world’s second-largest asset-management market, seen growing to US$40 trillion by 2030.

“Our belief is that the mainland China market has great potential and there is demand for long-term alpha, as well as for a wide range of investment products, including pension, ESG and wealth management, alongside digitalised services,” David Guo, China CEO at Schroders, told the South China Morning Post.

The British investment manager, with £737.5 billion (US$887.2 billion) assets under management globally, is the latest foreign entrant in the fast-growing asset-management industry in China, where household wealth is compounding at rates faster than GDP.

Schroders joins others such as BNP Paribas, Fidelity International, Neuberger Berman and AllianceBernstein in eyeing an industry buoyed by rising household wealth and the growth of the country’s pension system.

Motorists wait at a traffic signal light in Shanghai, China. Chinese stocks staged a sharp rebound as optimism that the Federal Reserve will pause interest-rate hikes in June helped rekindle risk sentiment. Photo: Bloomberg

A wealth-management joint-venture between BNP Paribas – the largest bank in France – and Agricultural Bank of China (ABC) was also given the greenlight this week by the National Administration of Financial Regulation (NAFR) to commence operations, after it received the initial approval last year.

Fidelity International and Neuberger Berman launched their own first mutual-fund products earlier this year.

The development comes amid comments by the head of NAFR, a new powerful regulator overseeing banks, insurers and financial holding companies, that stressed the need for consistent financial opening. Li Yunze made these remarks in his first public speech following his appointment.

“We will continue to stick to … going global, steadily advance the high-level opening of the financial industry, and constantly create a market-oriented, legalised and internationalised business environment,” said Li.

China “heartily welcomes” foreign institutions with prudent operations and sound quality to the domestic market, especially in wealth management, green finance, pension and healthcare and asset management, Li noted.

Schroders said it has teams on the ground with expertise in Chinese equity, fixed income and multi-asset investments, after its three decades of presence on the mainland via its joint ventures partnering with domestic players like Bank of Communications.

Shanghai-registered BNP Paribas ABC Wealth Management, which has an authorised capital of 1 billion yuan, will focus on issuance of both publicly-offered and privately-offered wealth management products, advisory and consultancy services as well as other related wealth-management services, it said.

Another foreign entity, Amundi, the largest asset manager in Europe, said it will increase its assets in Greater China to US$250 billion by 2025 in an interview with Bloomberg earlier this month. Its wealth management joint venture with BOC is discussing with regulators ways to participate in China’s private pension scheme.

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