This year marks the tenth edition of Institutional Investor’s All-China Sales Team — and China International Capital Corp. has something to celebrate.
The domestic firm was once again voted No. 1 in the survey, which ranks overall sales coverage as well as specific coverage of the mainland China, Hong Kong, and Taiwan markets. This marks a full decade of CICC as the top overall sales provider.
More than 490 buy-side analysts and money managers representing 330 firms rated providers while considering attributes that included adding value to research, idea generation, service, and responsiveness, as well as the ability to add much needed global context as China enters its third pandemic year.
CICC’s offering and the sales industry as a whole has undergone a transformation — or more like a trial by fire — since the onset of Covid-19, according to Huang Haizhou, head of equities at CICC.
“Sales services in China, especially at CICC, have become increasingly sophisticated in the past two years to cope with ongoing pandemic impacts,” he said. “Limited by very stringent travel restrictions and other social distance requirements, traditional sales services have been transformed to fit the ‘new norm.’”
Haizhou credits his firm’s investment in technology as well as its overall long-term digitization initiative for its ability to continue “to provide top-notch, uninterrupted sales, trading, and corporate access services to our clients in China as well as globally.” Haizhou believes his team’s ability to collaborate with the research team and a wide geographical sales network helped further differentiate its offering in “all parts of sales services including account opening, corporate access planning, and flexible working arrangement.”
Still, 2021 was a was a turbulent year for the Chinese market, according to Chaplin Tong, head of Hong Kong and China advisory sales for UBS. Chinese stocks underperformed the S&P 500 index by almost 50 percent following a $5.2 trillion sell-off in the MSCI China Index. “Heightened regulatory action in key industries like property, internet, and after-school tutoring; the common prosperity push; Covid flares and mobility restrictions leading to higher input costs; and ADR delisting risks all weighed on sentiment heavily,” Tong added. “Having said that, valuations are a lot more reasonable... We also see more policy easing, and we’re overweight China here.”
This means that, two years into the pandemic, the demand for on-the-ground color and coverage has been stronger than ever. “We have been gaining mind and market share with our on/offshore platform, leveraging our local expertise informed by global perspectives,” Tong said.
UBS took second place in the All-China Sales Team, up one spot from from last year. Huatai Securities ranked third, while Citi and Morgan Stanley placed fourth and fifth, respectively.
UBS also topped the international sales ranking, improving on last year’s second place finish. CICC followed UBS, with last year’s winner Citi dropping to third place. Morgan Stanley took fourth and Goldman Sachs rounded out the top five.
A third leaderboard based on the responses of solely mainland China respondents was also generated. CICC once again was No. 1 in this ranking, followed by Huatai Securities. UBS improved one spot to crack the top three as the highest-ranking global firm.
When it comes to domestic vs. international client demands, UBS is seeing an uptick in more data, evidence-based research demand, consistent with the firm’s Evidence Lab capabilities buildout in Asia, including Shanghai, according to Tong. “A-shares inclusion is driving structurally higher foreign ownership,” he said. “The needs and wants of domestic and international clients are converging, as increasingly they are framing investment debates through each other’s lens.”
Still, the share of international capital in the total market value of A-shares is still lower than that of other major markets, which leaves potential for future improvement, according to CICC’s Haizhou. “Under the new opportunity of ‘capital reform and opening up,’ the domestic capital market will continue opening up, and international capital continues flowing in,” he said. “As investors will have higher requirements for the depth and breadth of research, we believe that CICC’s research and sales teams can provide them with higher quality and more efficient services.”
In other milestones, 2021 marked the twenty years since China’s entry into the World Trade Organization, which is noteworthy according to Tong, who believes China will “open its door wider still.”
“The rebalancing of the economy is also critical to longer-term growth sustainability,” he added. “Foreign investors have been an increasingly important force in the A-share market, and we see this as a structural trend. UBS is in the sweet spot with our on/offshore setup, and early mover advantage as the first foreign full-licensed JV securities firm in China. We continue to see cross-asset, cross-border, and ADR homecoming as biggest opportunities.”
In addition to the All-China Sales Team, II also published the results of its ranking of China’s Top Corporate Access Providers, which closely mirrored the sales team results. CICC topped the overall survey, followed by UBS in second and the addition of more global firms down the ranks. Morgan Stanley took third, while Citi and JPMorgan Chase & Co. placed fourth and fifth, respectively.
As in the other surveys, two additional leaderboards were created to capture the difference between the international and domestic view. CICC topped the mainland leaderboard, while UBS was No. 1 on the international ranking.
But no matter where investors are based, corporate access has continued to evolve since the onset of the pandemic, when the whole industry went instantly virtual.
“A large portion of our corporate access activities switched from offline meetings to online conferences since the pandemic broke out,” CICC’s Haizhou reported. “For those clients who feel necessary to meet management, we arranged tailor-made corporate visit trips for them based on our strong corporate connections.” Online corporate calls have increased more than 500 percent since 2019 and a recent investment conference in Shanghai comprised both onsite and online portions for corporates and investors.
“When the Covid situation is brought under control, we believe in-person meetings are still more preferable for some clients,” he added. “However, going hybrid also gives the flexibility to keep things going without interruption under the ever-changing Covid situation.”
With more than two years of experience and technology enhancements, CICC believes corporate access can only become “more scalable and user-friendly.”