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Z-Ben: Chinese IIs to put $1.1trn offshore by 2021

Offshore assets that global managers can potentially tap are expected to hit $1.1trn in 2021 -- 17% of the total assets from mainland institutional investors, according to consultant Z-Ben Advisors.

“While actual growth has never been in question, it is the new urge to diversify offshore that will put their assets within reach of many global managers,” the firm said in a report.

Growth of institutional assets increased 5x over the past 10 years to $7.1trn in 2015 from $1.1trn in 2005, the report said.

The amount is expected to expand by another 50% to $10.8trn by 2021 and $6.2trn of it is likely to be addressed by global asset managers.

Insurers account for the largest portion ($4.4trn), followed by pension funds and sovereign wealth funds, the report noted. Insurers “should see long-term expansion into different asset classes, particularly offshore – where few have trodden with conviction”.

Insurance companies have recently been permitted to buy stocks through the Stock Connect scheme, and asset managers such Enhanced Investment Products in Hong Kong are already seeing the potential for increased flows into their funds from mainland insurance companies.

Spence Johnson, a London-based consultancy, estimated addressable assets to third-party managers in Asia-Pacific will reach $10trn in 2025 compared to $5.7trn last year.

“Foreign managers still remain less than half the total addressable asset pool” in China, it said in a report released last month. 

“The importance of having a local presence in select markets will become more significant over time,” it continued, while “regulatory uncertainty in conducting business in some of the fastest rising markets like China and Southeast Asia” remains as issue.

Part of the Mark Allen Group.