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China pension reform and the opportunities it brings
Chinese pension system reform is an extremely interesting and highly relevant topic to international and local Chinese asset managers alike. China has the largest population in the world and it is ageing. However, the 3-pillar pension system still has a long way to go in its development. The public pension (first-pillar) is the most developed among the three while the second pillar (corporate annuity and professional annuity) is still very small. The third pillar (individual pension) is under construction but promises to be a fast-growing and very significant part. The expected growth of the pension sector would mean great business opportunities to asset managers and other solution providers.
Meanwhile, at the expenditure front, the growth of pension and the ageing society would also push quite a few industries such as healthcare, insurance, special real estate, etc. The investment opportunities in such industries in China also pose important topics in this workstream.
We’d like to foster the exchange of experience between China and Europe in pension system development, in pension asset allocation, etc. We would also wish to provide a platform where global asset managers can communicate with Chinese pension operators to demonstrate their capability and resources.
ESG investment in China
ESG has become a hot topic not only in Europe but China as well. UNPRI has seen the exponential growth of signatories from China in the last couple of years and many of the leading Chinese asset managers, ranging from mutual fund to hedge fund and private equity, have now built up their own ESG policy and capability. Leading international asset managers are also operating in China now, bringing their ESG experience into the market. This means that for the ESG-minded investors in Europe, they will have a growing universe of managers to choose from for their China market exposure.
This workstream brings international bodies, Chinese market infrastructure, asset managers and asset owners to gather to communicate on:
- The stage of China’s ESG investment development;
- The leading players in the field;
- ESG adoption in various asset classes;
- Outstanding issues and the way ahead.
Digital technology application in China asset management industry
Digital technologies have been adopted by the asset management industry across the whole of the value chain: big data in research, AI in trading, blockchain in the post-trade process, etc. Chinese asset managers are catching up very quickly and in some of the areas have achieved a leading position. These practices create return opportunities for global investors but also, as the case in other markets, poses regulatory concerns.
This workstream facilitates discussion among investors, leading managers and various research houses and consultancies to check the progress and identify winners in China for digital technology adoption. Comparison between Chinese and international practices will be made in strategy and compliance, demystify various business models and clarify the possible routes for further progress.
Successful hedge fund strategies in China
Hedge funds (called “private placed securities fund” in China) have grown to be important players in the Chinese asset management industry, serving institutional investors and HNWIs. Global investors have now also paid increasing attention to this group of managers in China, especially in the backdrop that many leading international hedge fund houses have applied for the Private Fund Management (PFM) business permit in China.
This workstream aims to analyse various hedge fund strategies in China, within the unique Chinese market environment (relatively lower market efficiency than the developed market, retail investor dominance of the equity market, etc.) and identify winning strategies and characteristic of winning managers.
Value creation by private equity in China
Private equity (and other private market investment such as real estate investment and infrastructure investment) has a short history in China but occupy quite a portion of local investors’ portfolios now. It has been a major asset class that has produced a continuous high return for Chinese institutional investors and HNWIs over the past 18 years. However, due to investment policies, many of the global pensions, insurance and other investors have not yet actively allocating to this sector in China. But with the private market return flattening in some of the major developed markets, Chinese PE/VC investment would become an increasingly attractive option.
This workstream would engage some of the leading PE/VC firms in China market to communicate their logic of value creation and risk management in the China context.