Assets under management in China could hit $1.4 trillion over the next nine years, making it the fastest growing market in the world, management consultancy firm McKinsey said March 15. China now has $156 billion in assets under management, McKinsey said in a study, and according to its calculations they should increase by an annual compounded rate of 25% until 2016.
The exceptional growth will be driven by a shift in consumer savings from low-interest bank accounts to high-yielding investments such as mutual funds, and other capital market instruments.
The report warned that growth would be bumpy, with significant volatility expected in its fledgling capital markets, especially given an investor base that is focused on short-term performance. "The next few years will present a critical opportunity for those players seeking to differentiate themselves from the more than 50 domestic and foreign joint venture asset managers competing in the market today," it said.
Stephan Binder, a partner in McKinsey's Shanghai office, added that foreign asset managers hoping to perform well would have to balance risk and growth, while building brand awareness that stands out.
The study also found that mutual funds in China were expected to hit $890 billion by 2016, an annual compound growth rate of 23%. It forecast pension funds expanding to $380 billion from $46 billion.
McKinsey also said that more than 60% of asset managers in China have assets below $700 million to $800 million. Of the 20 active foreign asset managers operating in China, only around one-third have assets that exceed this level, it said.
Copyright Agence France-Presse, 2007