“Global fund managers, including even Hong Kong-based managers, need to understand that China’s culture and its people’s expectations are distinct.
“In particular, they are less patient for economic growth – and are used to double-digit growth rates – than many other countries,” said Wan, during a recent panel discussion in Hong Kong.
She said this could extend to mainland investor patience for investment growth, which can be far less than that of counterparts in developed Asia, and foreign fund managers need to be keenly aware of this shorter horizon for bigger returns.
“Even in retirement, [investment expectations] can be double-digit growth every year,” she said.
“The other aspect that people must understand is the speed of the development of the country’s capital markets,” she said.
For instance, in April, the Japan Exchange Group (JPX) and the Shanghai Stock Exchange (SSE) established the Japan-China ETF Connectivity scheme, which enables cross-border trading of ETFs.
Earlier this month, six exchange-traded funds were approved under the Japan-China ETF Connectivity scheme.
On 17 June, the long-awaited Shanghai-London Stock Connect program was launched after four years of discussion.
The program will allow specific companies listed either on the Shanghai Stock Exchange or the London Stock Exchange to issue depositary receipts, which represent ownership of their shares, on the other bourse.
Also this year, foreign banks and brokerages, including JP Morgan and Nomura in March, have been given regulatory approval to set up majority-owned joint ventures in China. Meanwhile, China’s policy makers are considering a new foreign investment law that might open up the country further to overseas businesses, including financial firms.
“Regulatory developments in China can move very quickly, so we need to be constantly aware,” Wan said.
China officials have made it clear the liberalisation will continue.
“China’s opening-up will continue. We will further open up the financial sector in an active and orderly manner and welcome overseas financial institutions and investors in this win-win process,” said Chen Yulu, a deputy governor of the People’s Bank of China, in the Caixin Roundtable in Washington, on 12 April.
The opening of China’s financial markets is also an issue in the ongoing US-China trade dispute.
