China’s mutual fund market could be worth US$350 billion by 2030, predict fund consultants Ceruli Associates in the latest issue of The Cerulli Edge-Global Edition.
“Coupled with successful pension reform-expected to generate as much as US$1.8 trillion by the same year-China’s fund management industry could eclipse the rest of those in mainland Asia and rival Japan’s in size if not addressability,” says Cerulli.
Now that China’s fund management industry clearly is now open for business, foreign fund managers are grappling with the calculus of market entry.”
Closed-ended funds have been available in China since 1997; open-ended vehicles, first launched in late 2001, now hold upward of RMB30 billion (approaching US$4 billion). China’s total collective scheme industry has surpassed US$10 billion in size. Cerulli believes its US$350 billion figure is quite conservative, given that it would still represent a far smaller proportion of the household balance sheet than mutual funds currently represent in other Asian markets.
Since July 2002, the Chinese government has allowed foreign fund managers to enter the marketplace through joint- venture partnerships with domestic firms. This is likely to increase the number of announcements regarding Sino- foreign alliances. But CA believes foreign fund managers will fail to see profits from such joint ventures until 2011 at the earliest, as the cost of market entry remains high. “In addition, we have reminded our clients about the checkered history of all cross-border joint ventures in fund management, more than half of which are now defunct,” concludes Cerulli.