China is on its way to becoming the world’s largest asset management market after the United States, according to a new study from Casey Quirk, a consulting practice owned by Deloitte.
The U.S.-based asset management consultancy predicted that China will surpass the U.K. to become the second-largest asset management market by 2019. According to the white paper published this week, China will attract half of the industry’s net inflows of new assets in the coming two years. By 2030, Casey Quirk estimated that assets under management in the China market will grow by up to six times to $17 trillion, up from $2.8 trillion last year.
Growth rates in China’s fund management industry were projected to average 15 percent a year through 2025 and slow to 12 percent a year from 2025 to 2030. According to the study, this translates to $8.5 trillion in new assets flowing into the industry from Chinese investors between 2017 and 2030 – equivalent to the amount of net new flows from all other global markets put together during the same period.
“In contrast to the rest of the world, China is the only large, multi-trillion dollar asset management market that has seen net new flows in excess of 30 percent on average for the past five years,” said Daniel Celeghin, a principal with Casey Quirk and head of its Asia Pacific office, in a statement.
[II Deep Dive: China Seeks Closer U.K. Ties in Asset Management]
The consultantcy predicted that foreign firms will account for only 6 percent of China’s asset management market by 2030, hindered in part by a preference among local investors for domestic assets classes.
“Foreign firms that want to capture market share in China will need to set clear objectives, be flexible with their business models, make a commitment to put down roots here and seriously consider mergers and acquisitions,” Celeghin said. “They will also need to develop a significant working relationship with one or more local companies.”