China Market Forecast Report I Five Minutes to Midnight, 2012
2012 will see a continuation of volatile equity markets, and any momentary rebound will lead to significant redemptions among mutual fund companies. Overall growth will remain limited and the public fund industry will see approximately RMB2.9tr in AUM by the end of 2012, in our base case. The remainder of China’s investment management industry will fare somewhat better as they take the first steps to build their business capabilities. Beyond 2012, however, expectations are significantly improved, with broad-based growth and additional business opportunities set to expand rapidly. Our base, pessimistic and optimistic assumptions are provided for each of the segments considered, yielding different scenarios that can be used to plan a wide variety of approaches to China’s investment management marketplace.
Z-Ben Advisors’ forecast report for 2012 expands considerably upon previous iterations, covering a host of segments in China’s investment management industry and how competition will affect the development of each, both individually and collectively. With the industry becoming ever more competitive, having realistic expectations is critical to allocating resources as efficiently as possible. Focus areas of this report include:
- Capital Markets: While not the focus of our projections, expectations for macro-economic indicators are provided in order to test projections of other variables. These include equity and fixed-income markets, and their impact on China’s investment management industry.
- Mutual Funds: Many fund management companies have seen the industry becoming increasingly competitive. To alleviate this, product design and fine-tuning operational models will be necessary in order to attract investors as well as reduce costs.
- New Platforms: Regulators have pushed a host of other segments to develop their asset management capabilities, and many of these are set to become even more of a competitive threat against asset managers in 2012.
- Cross-Border Business: Regulatory change for cross-border investment programs will be gradual but we expect heightened capital flows (in both directions), especially if global markets stabilize.
China’s investment management industry is set to become highly lucrative and positioning in the near-term will allow managers to fully exploit their advantages and position themselves for long-term growth in the region. For this to be realized, accurate forecasting and planning is all but essential.
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