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Asset management firms see windfall from B&R Initiative

By Shi Jing in Hangzhou | China Daily | Updated: 2017-12-13 07:52
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China's Belt and Road Initiative will create new opportunities for the asset management industry in the Asia-Pacific region in the next few years, a new industry report said.

Asset management practitioners should take advantage of the huge opportunities for infrastructure construction in the countries and regions that are related to the initiative, said Ba Shusong, chief economist of the China Banking Association, while releasing the 2017 Asia-Pacific Asset Management Industry Development Trend and Forecast report in Hangzhou on Tuesday.

According to the report, total infrastructure investment in those regions that are part of the initiative would be about 7.3 trillion yuan ($1.1 trillion) between 2017 and 2020. Most of the investment will be used for new projects, with the energy sector accounting for most of the spending.

Besides, mergers and acquisitions will become active in economies taking part in the initiative. Finance, energy, telecommunications, industrial and raw materials are the major industries that would see most of the M&As.

"Companies will need to go public, issue bonds, make structured financing, and make investment in the capital market both at home and abroad. In that sense, asset management companies should provide services to help such companies come out with the most suitable operation plans and reach the right target," he said.

To carry out cross-border business against the backdrop of the Belt and Road Initiative, asset management institutions in the Asia-Pacific region can seek opportunities in the foreign exchange or interest rate futures market or set up cross-border financial platforms to help their clients explore the overseas market more efficiently.

Apart from the opportunities created by the Belt and Road Initiative, another major trend in the asset management industry in the Asia-Pacific region is the further opening-up, which will be exemplified by mutual recognition of financial products between different countries and regions, according to the report.

Meanwhile, the rise of financial technology, especially with the adoption of big data, cloud computing, artificial intelligence and block chain technologies, will change the landscape of the asset management industry, according to Ba.

By the end of 2016, the total size of the asset management industry in the Asia-Pacific region reached $109 trillion, up 5.83 percent year-on-year, according to the report. That number accounted for 65 percent of the global total last year. The total asset management volume in China amounted to 116 trillion yuan by the end of 2016.

The Chinese regulators released in mid-November draft guidelines to unify rules for asset management products issued by all types of financial institutions. A leverage ceiling is required to be set for each asset management product. The transition period for the draft guidelines will last until June 30, 2019.

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