The following is the China asset management series report 2020 From BCG & Everbright Bank recommended by recordtrend.com. And this article belongs to the classification: Investment & Economy, Boston Consulting.
2345-31 2020 is a key year for China’s asset management industry to connect the past with the future. On the one hand, 2020 is the closing year of the 13th five year plan cycle and the third anniversary of the implementation of the new asset management regulations. Novel coronavirus pneumonia is facing serious impact on China’s information and management industry. It has achieved a positive growth of 10% in scale, and the total volume is 122 trillion yuan. It has returned to the level of 2017 before the implementation of the new regulation. Under the same scale, the proportion of channel business and expected revenue product scale decreased significantly, and the asset quality improved significantly. According to our calculation, the active management business has doubled in the past three years. In addition, as the focus industry of the transformation of the new asset management regulations, bank financial management companies have broken through the cocoon and become butterflies. More than 20 financial management companies have been approved and started business one after another. After more than a year of operation, the scale of net worth has grown rapidly. The recovery of the industry scale, the improvement of the quality and the transformation of the industry jointly mark that the transformation of China’s asset management industry has achieved phased success. On the other hand, 2020 is also the year of the 14th five year plan. Looking forward to the fourteenth five year plan, in the face of great changes not seen in a century, how can the asset management industry take advantage of the situation, how can it further meet the needs of residents and the real economy, grasp the opportunities and meet the challenges? This report forecasts the market opportunities of the 14th five year plan from the capital side, the asset side, and the business model side of the asset management institutions. In addition, we further studied the diversification and integration of global asset management groups, and provided suggestions for Chinese asset management institutions to strive for the first class.
1、 Market review in 2020: set sail and accelerate the transformation of China’s asset management industry
1. Overall market: scale recovery, quality leap
In 2020, facing the complex external environment, the pace of transformation and development of asset management industry has not slowed down. By the end of 2020, the scale of China’s asset management market has reached 122 trillion yuan, an increase of nearly 10% compared with 111 trillion yuan in 2019. The overall scale of the industry has returned to the level of 2017 before the implementation of the new asset management regulations.
With the same asset management scale of 120 trillion yuan, there is a huge difference in asset quality between 2020 and 2017. With the gradual implementation of the new asset management regulations, the expected revenue products and channel business of the industry have been greatly reduced. We expect that the asset management scale after removing the channel and expected revenue products will actually achieve an annualized 27% high-speed growth in the past three years, doubling in three years.
The impact of the new asset management regulations and the adjustment of business quality are directly reflected in the changes in the scale of various sub sectors. If we compare the changes in the scale of various sub industries in 2017 and 2020, we can see that the scale of four sub industries directly affected by the new asset management regulations, such as bank financing, trust, fund subsidiaries and asset management of securities companies, has decreased significantly in the past three years, of which the scale of fund subsidiaries and asset management of securities companies has even decreased by 50%. At the same time, insurance asset management, public funds, private funds and other sub industries with less regulatory impact have achieved rapid growth. Among them, insurance asset management has achieved a cumulative growth rate of 41% in three years, and the growth rate of public and private funds is more than 50%. However, if we exclude channel business and expected revenue products, as shown on the right side of the figure below, we can see that almost all asset management industries have achieved substantial growth in the past three years.
2. Market structure: stable capital structure and accelerated product innovation
In 2020, the capital supply of China’s asset management market will continue to grow, exceeding 107 trillion yuan, with a growth rate of 15%. The capital structure remained stable as a whole, of which the retail end contributed nearly 60 trillion yuan, still accounting for half of the country. On the institutional side, the scale of insurance funds benefited from the growth of premium and the increase of outsourcing ratio, and continued to maintain a high growth rate. Affected by the epidemic situation and the transformation of financial management net value, part of the return deposit is the only capital subject with negative growth.
The scale of asset side cash management products continued to grow, but the proportion decreased“ “Solid income plus” has become the mainstream with both offensive and defensive functions. The attraction of equity products is enhanced, and the phenomenon level expansion. Passive products grow steadily, and the increase and decrease of subdivided product lines are mutual. The pilot of public offering REITs will open up a blue ocean of new assets. Mom market is hot and promising.
3. The impact of the epidemic on the global asset management market: strong recovery and sustainable development
In general, we found that the global asset management market pattern showed three accelerating trends under the epidemic situation. First, the scale of the global asset management market has accelerated. The global asset management market recovered rapidly after the epidemic. Take mutual funds as an example, the scale of assets under management rebounded rapidly after a short decline in the initial stage, reaching US $55.9 trillion by the end of 2020, with a year-on-year growth of 15%. In addition, the net capital inflow at the end of 2020 increased by 4.4% over the beginning of the year, exceeding the performance of the same period in 2019. Second, the global asset management market has accelerated differentiation. In the mood of risk aversion, whether it’s standard products or alternative products, we all find that capital inflows accelerate to the head. Third, global asset management institutions should speed up their strategic layout. In 2020, the amount of M & A transactions in the US asset management market set a record.
In addition, the two major trends mentioned in our report last year will continue for a long time. First, sustainable investment and social responsibility. ESG and sustainable investment will accelerate their long-term development and become the most important corporate mission and strategic layout of the world’s leading asset management institutions. Second, digital upgrading. Under the epidemic situation, the development of digital economy is accelerated. Like other industries, digitalization will also have a profound impact on the asset management industry. We will elaborate on the relevant contents in our report in 2019.
2、 Review of the first anniversary of financial management company
one Development and operation of financial management company
By the end of 2020, the CIRC has approved the preparation of 22 bank financial management companies and 2 foreign-funded holding financial management companies, of which 19 Commercial Bank financial management subsidiaries and 1 foreign-funded holding financial management company have been opened. The establishment of wealth management company marks that the bank’s wealth management business is gradually going on the development track of marketization, specialization and standardization. It is also the core of commercial banks’ participation in direct financing and embracing the vigorous development of wealth management market. At the same time, the financial management subsidiary is more flexible in product form, sales threshold and asset investment, and the license value is significant.
2. Ten questions and ten answers, review and Prospect of the first anniversary of financial management company
Before the establishment of bank financial management subsidiary, the industry had various doubts about its future development prospects and business model. Standing at the time of the first anniversary of the establishment of the financial management company, we have selected the ten major issues that the industry was most concerned about the financial management subsidiary a year ago. We hope that by answering these ten questions, we can sum up the past on the one hand, and make prospects for the future development potential and direction of the financial management subsidiary on the other.
Scale: after the transformation of net worth, can the scale of bank financing achieve rapid growth?
Net worth: can customers accept net worth products after breaking the rigid exchange? If the product is broken, how will the customer react?
Customer: who are the main customers of bank financing? Can the customer structure achieve a breakthrough in the medium and long term?
Channel: besides the parent channel, can the financial management company further expand the third-party channel and self built channel?
Product: what is the main product form of bank financing? How is the product structure different from that of public offering institutions?
Positioning: how will banks position their financial management subsidiaries? How to choose the business scope and development mode of financial management company?
Investment and research: can we quickly build equity related investment and research capability?
Talent: what is the degree of marketization of financial management subsidiary?
Risk control: how does the construction of risk management system meet the requirements of standardized investment?
Technology: can the current technology system support business development? In the long run, can we build a competitive advantage around financial technology?
*Due to the space, we are unable to further expand the specific content of the above topics. Please contact us for detailed reports and follow-up reports.
3、 Outlook of asset management industry in the 14th five year plan
In the 2017 asset management report, we proposed that the development of China’s asset management market can be divided into three stages. 2012-2016 is the “Pan asset management stage”, and 2017-2020 is the “return to the original stage”. After 2021, combined with the implementation of the new asset management regulations, it is likely to enter a new stage of “comprehensive development”. It is estimated that in the next five years, China’s asset management industry will achieve an annual growth rate of 12%, with a scale of nearly 210 trillion yuan in 2025, of which the proportion of channel business will further decline significantly.
The stage of “all-round development” brings opportunities to China’s asset management industry. As the country embarks on the new journey of the fourteenth five year plan, the capital side, asset side and business model of the asset management industry will also undergo tremendous changes. We suggest that China’s asset management institutions focus on 12 opportunities (as shown in the figure below).
*Due to the space, we are unable to further expand the specific content of the above topics. Please contact us for detailed reports and follow-up reports.
4、 Discussion on Industry Development: striving for first class, building diversified and comprehensive asset management group
one What is the diversification and integration of asset management institutions
▪ Diversification: asset management institutions usually carry out diversified operations around five main dimensions: asset class, capital source, regional market, investment strategy and industry coverage. As shown in the figure below, we can use cobweb chart to represent the diversified scope of an asset management organization. The area covered by the five dimensions of the connection represents the size of the asset management business scope of the organization.
▪ Integration: as shown in the figure below, asset management institutions usually extend their business scope in three directions: capital end, asset end and interbank asset management institutions end, and can expand to eight business types.
2. Why should asset management institutions be diversified and integrated?
There are three driving factors
First, the scale of asset management business wins;
Second, customer demand is becoming more and more comprehensive;
Third, asset and industry cycle rotation.
At the same time, we analyze the business portfolio of the world’s leading asset managers. Both Blackstone, pioneer and fidelity, the world’s largest independent asset management companies, and Blackstone, KKR and Bofeng, the world’s largest alternative asset management companies, all present a diversified and comprehensive development pattern.
3. How can asset management institutions achieve diversification and integration?
▪ Actively use non organic growth means such as M & A and strategic cooperation.
Taking one of the largest asset management institutions in the world as an example, since 2005, the scale of asset management has gone through the golden era of “20 years and 20 times” through extensive M & A.
▪ Get the top professional team needed for new business and match the mechanism.
Taking the largest alternative asset management organization in the world as an example, we firmly believe that the core of asset management business is talents, and the acquisition of talents is a minimalist form of non organic growth. In the past business expansion, we continue to obtain the best team in the market and give the core team 30% – 50% of the shareholding plan.
▪ Around its own resource endowment and ability circle gradually expanded.
Taking the world’s largest alternative asset management group as an example, in the process of diversification, we always adhere to the gradual expansion around our own core resource endowment. Relying on its own physical asset management ability accumulated in the energy and real estate industry, it will expand to the infrastructure industry, and then carry out investment in private equity related industries around the core competence of physical assets and heavy asset management.
▪ Establish an appropriate asset management group structure to manage all business lines and subsidiaries.
As shown in the figure below, according to the degree of group integration, it can be divided into three modes: simple mixed mode, multi boutique mode and unified platform mode.
Read more: Everbright Bank & BCG: China asset management series report 2019bcg & China Foreign Trade Trust: China Trust Industry Report 2017 (with download) global risk report 2020: banking self subversion at the right time (with download) China Construction Bank & BCG: China Private Bank 2019bcg & K50: China asset management market outlook 2017 enterprise merger and acquisition report: technology leads global merger and acquisition Trend (with download) Boston Consulting: the total investment of global financial technology companies in 2017 was US $570 million Industrial Bank & BCG: report of China’s private banking in 2017 Boston Consulting: Asia’s private wealth will increase to US $48.1 trillion in 2017 BCG: survey shows that Chinese consumers’ confidence in the economic outlook is weakening Boston Consulting: China’s private investment under the climate crisis Boston Consulting: 2 2016 global capital market report (with download) Boston Consulting: the scale of Internet economy in the UK reached 191.7 billion US dollars, accounting for 8.3% of the UK GDP. Boston Consulting: China’s Internet accounted for 5.5% of the GDP, ranking the third in the world. Yiguan: the transaction scale of China’s mobile banking customers in the first quarter of 2018 was 66.89 trillion yuan
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