Despite the multifarious challenges facing China’s economy, its asset management industry has continued to experience robust growth, with assets under management (AUM) reaching 134 trillion yuan (US$19.7 trillion) as of April this year, up 11% from a year ago. This is due in large part to the expanding mutual fund business, with AUM totalling 25 trillion yuan as of April.
The asset management market still has a huge room for growth, and its total AUM is expected to hit 210 trillion yuan by 2025. Playing a huge role in this market are the commercial banks and securities firms, which have been serving the needs of the industry.
In the custody business, banks play a major role in key areas such as servicing mutual funds and insurance assets, while securities firms perform an equally important function for private securities investment funds.
The market expects major changes in the mutual fund space. Fund administration has been done in-house by fund managers. However, regulators have been calling on mutual fund managers to focus on the investment side and outsource fund administration. So far only a few smaller fund managers have heeded the call, but securities firms and banks are getting ready for this opportunity.
Cross-border business is growing, especially with regard to China access. Foreign investors remain positive about A shares and China’s economic growth in the long term. Since the relaxation of the rules for the Qualified Foreign Investor (QFI) scheme in 2020, at least 164 more QFIs have received approval as of the end of 2021.
It is in this context that The Asset board of editors announces the winners of the "Best in Asset Servicing, China” as part of The Asset Triple A Sustainable Investing Awards for Institutional Investor, ETF, and Asset Servicing Providers 2022.
Best in Asset Servicing, China
Best Custodian – Bank
ICBC remains the largest custodian bank in China, holding leading positions in servicing sectors such as securities investment funds and insurance. During the awards period, the bank also onboarded several clients both from local businesses and cross-border businesses such as QDII and QFI.
China Merchants Bank
As the second largest custodian bank in China, China Merchants Bank recorded an assets under custody (AUC) growth of 21% in 2021. The bank has taken leading positions in multiple businesses such as custody services for mutual funds and trusts. The bank is also aggressive in service innovation, achieving many market-firsts during the awards period.
Best Custodian – Securities Company
Guotai Junan Securities
Guotai Junan Securities continues to be the most competitive asset service provider among securities companies in China. The company has maintained a well-balanced custodian business, in comparison to that of its peers.
CITIC Securities has recorded solid business growth in its sixth year of development. With a team that focuses on service quality and solution innovation, the company has onboarded new clients both from local and cross-border businesses.
Best Custodian, QDII
Bank of China
Bank of China has taken great strides in the cross-border business. Its QDII business, in particular, reported a 25.55% growth in assets under custody in 2021, the largest so far and outperforming its peers.
Best Custodian, Insurance
ICBC has onboarded multiple insurance clients during the awards period. The bank now has a market share of 21.31% in this space, while client coverage rate has reached 63%.
Agricultural Bank of China
Though smaller in business scope, Agricultural Bank of China relied on its solid service quality and agile team to onboard one of the largest mandates in the insurance space in 2021.
Best Custodian, Mutual funds
China Merchants Bank was selected as the custodian bank for several innovative mutual fund products in 2021. The bank continues to boost its advantages in servicing mutual funds, resulting in a 44.27% growth in AUC.
Best Custodian, Pension funds
Bank of Communications
The pension fund market was relatively stable last year. Bank of Communications continues to provide first-class service for pension funds in China, resulting in positive client feedback during the awards period.
Best Custodian, Bank wealth management
Bank wealth management products account for about a fifth of the total custodian business in China. Asset servicing providers, especially banks, are eyeing opportunities in this space with smaller banks such as city commercial banks setting up wealth management subsidiaries. The Asset introduces this award category this year to highlight the rising opportunities in the market.
China Merchants Bank is leading the pack in terms of AUC of bank wealth management products. Given the large base, the bank cornered a significant 21% share of the business, servicing more than 200 commercial banks and bank wealth management subsidiaries.
Best Custodian, Private funds
Private funds continue to be a key business area for CITIC Securities. The company now leads the private fund custodian market in China with about 14% market share.
Guotai Junan Securities continues to be a major player in providing services to private funds. During the awards period, the firm led the market in terms of the number of newly issued private funds under custody.
Best Custodian, Private funds – WFOE PFM
Though the pace of foreign asset managers setting up WFOE PFM in China slowed in 2021, CITIC Securities did not let up in providing the best services to clients in this space, achieving several market-firsts in the process.
Guotai Junan Securities is among the go-to service providers for WFOE PFM clients, servicing more than 10 billion yuan of assets in this space.
Best in Fund Administration, Mutual funds
Only a few service providers have entered the fund administration business for mutual funds and CITIC Securities was among the first. The company seeks to further grow this business in light of new market trends.
Best in Fund Administration, Private funds
With its fund administration services attaining international standards, Guotai Junan Securities has been gaining widespread praise from the industry and commendation from regulators.
HSBC corners leading market share across asset classes in the Hong Kong and China access schemes. With a strong relationship with regulators and market participants, the bank continues to provide high-quality services as reflected in positive client feedback it has been receiving.
Standard Chartered is among the top banks supporting clients to access the China market via a full range of schemes. The bank has shown solid business growth during the awards period.
With a leading position in most of the China access schemes, HSBC remains to be the go-to bank for foreign investors looking into opportunities in China.
Best Custodian, CIBM Direct
HSBC is the top player in the CIBM Direct space, taking about 33% market share and ranking the top among its peers.
BNP Paribas recorded a significant 50% growth in AUC in the CIBM Direct business. Positive feedback from clients speaks volumes of the service quality of the bank.
Best Custodian, QFI
HSBC remains the top bank when it comes to servicing clients investing in China via QFI. About 30% of the newly approved QFI clients chose HSBC as their service provider during the awards period.
China Construction Bank
China Construction Bank has reported the highest AUC in servicing QFI clients among Chinese banks, with a market share of 51.7% among the “Big Four” banks in China.
Best Custodian, Stock Connect
HSBC continues to be the dominant player in the Stock Connect space, with detailed feedback from clients that reflects the good services they have received from the bank.
BNP Paribas has recorded a significant 143% AUC growth in servicing Stock Connect clients. Many clients have provided positive feedback regarding the bank’s services.
Best Custodian, Bond Connect
Standard Chartered recorded 58% AUC growth in servicing Bond Connect clients, and a 27% market share.
HSBC retains its position in servicing Bond Connect clients, with positive feedback from clients that reflects the high quality of service it provides.
For a full list of winners, please click here.
To participate in the awards ceremony, please contact [email protected]