International Banks Investments In China Finally Pay Off
As China starts to open its massive consumer market to international financial institutions, a handful of foreign firms are starting to gain a massive lead ahead of everybody. A recent data revealed that some of the world's top international banks are finally seeing their investments pay off in China.
Shanghai-based Z-Ben Advisors recently released its annual rankings for the 25 best performing foreign money managers in China. Topping the list are some of the world's most prolific institutions. Leading the pack are UBS, Invesco, and J.P. Morgan. The data released by Z-Ben Advisors was gathered in December 2018. Firms were scored based on three business criteria: onshore, outbound, and inbound.
In terms of onshore money, Invesco topped UBS in this particular criteria. As for J.P. Morgan, the company's asset management division continues to top the industry in terms of Chinese outbound investment. Additionally, J.P. Morgan Asset Management announced in January that an addition of two more funds was given approval for "mutual recognition."
Leading the list is the Switzerland-based UBS. The company has topped the list for two consecutive years and has been channeling investments into China for 20 years. With this massive wealth of experience doing business in China, UBS has also positioned itself to be one of China's top domestic securities provider.
In November 2018, UBS made history by becoming the first foreign bank to receive China's approval to take a majority stake in its joint venture together with China Guodian Capital. Prior to this approval, domestic policies limit foreign banks to only acquire minority stakes, thus giving local partners majority control.
In an email sent to CNBC, Z-Ben Partner Chantal Grinderslev wrote, "The least predictable aspect of the China market is the pace of change. As a result, China is not a market you lead it's a market you grow with."
In terms of mutual fund flows, Z-Ben expects that it will help assets under management to grow in China to $12 trillion come 2027. Over the last 12 months, a number of Chinese stocks and bonds were added into the global indexes which are operated by Bloomberg and MSCI. Market experts said that this inclusion will help drive billions of dollars of fund flows towards China within the next few years.
Regarding top money managers in China's inbound businesses, Fidelity International top the list released by Z-Ben. Fidelity International is now an independent overseas arm an American asset management giant. The firm overtook BlackRock to the number one spot for this list from Z-Ben.