Outsourcing Investment Will Face Transformation
The outsourcing business, also known as the entrusted investment business, refers to entrusting funds to external organizations to invest and manage according to an agreement. Banks are the largest capital provider in the outsourcing market.
With the tightening of monetary policy this year, decreasing liquidity, and increasing bond yields, banks will bear higher risks to obtain high returns through outsourcing. The guaranteed returns generated by wealth management products offered by banks will ultimately disappear, which means existing mode of outsourcing investment will also face transformation.
Regulation Helps Capital Market’s Healthy Development
The rise of China’s capital markets has been a major event for the global financial industry in the past three decades, and it has been closely linked to China’s economic take-off. Currently, there are over 3,200 companies listed on China’s capital markets.
At the same time, the capital markets could face many problems. The CSRC has rolled out policies over the past year that moved the markets in the right direction. Although, in the short term, some regulatory measures may be controversial, they are conducive to the long-term development of the capital market. An increasingly improved capital market is a precondition for the long-term development of the capital management industry.
Fund Companies Should Serve Pension Funds
China began the construction of a social pension system in 1991. However, the dual challenges of a declining replacement rate for basic pensions and empty individual accounts grow more serious. In addition to basic old-age insurance, enterprise and occupational annuities, building a third pillar based on individuals’ own retirement plans is key to improving China’s pension system.
In order to build a universal and efficient third pillar pension service system, the fund industry should vigorously develop fixed-income products and investment products with stable cash flow, actively channel pension funds into the asset management market, and push for the improvement of the tax system in the capital market.
Exclusive Interview with Godfather of PE Investment in China
David Liu, one of the first private equity investors in China, founded and successfully managed the China business of Morgan Stanley Private Equity Asia and KKR, both global industry giants, since he started out back in 1993. About six months after leaving KKR, David Liu recently sat down for an exclusive interview with Caijing.
“A long-term value investor should invest with the mentality of entrepreneurs. Really good returns are obtained through long-term investment gains after spotting promising companies, rather than simply through capital operations.” David contends that self-discipline is the most important quality for PE investors, who should know the limits of their abilities and avoid following trends blindly.
“Wealth Qingdao,” a New Trademark for the City
The Qingdao Wealth Management Pilot Zone was officially established in February 2014. Since its approval, the pilot zone has played two roles: one is to explore a specialized wealth management system combined with local economic development in Qingdao; the other is to accumulate experiences that are replicable and can be used as reference points for advancing overarching financial reform through regional pilot programs.
As the only comprehensive wealth management financial reform pilot area in China, cultivating diversified wealth management institutions is Qingdao’s primary task. After three years of exploration and construction, “Wealth Qingdao” is becoming a new trademark of the city.