The effects of the Covid-19 pandemic have not dampened investors’ enthusiasm for Chinese funds. Over the last year, the Chinese fund market reported a 37% rise in net revenues year-on-year, while net inflows increased 21.8% compared with the year before, according to Cerulli Associates.
“We expect investors to show continued interest in Chinese equities in 2021 and beyond, based on the country’s earlier recovery from the pandemic and its growth prospects relative to other markets,” said André Schnurrenberger, managing director of Europe at Cerulli Associates.
“Investors remain bullish about the country’s stock market and regulators are pushing for the development of funds investing in equities, including fast-track approval for equity-related fund applications submitted by fund management companies that score higher under the scorecard method introduced in late 2019,” he added.
The MSCI China reported a return of 29.7% in 2020, six percentage points higher than that in 2019.
Looking ahead, Cerulli expects Asia Pacific markets to outperform the global markets in terms of compound annual growth rate (CAGR), with China and Korea leading the pack with an estimated double-digit CAGR.
Assets in China and India are set to grow the most over the next five years and beyond, said Cerulli. At least 1,300 funds were launched in China last year, amassing RMB 3.1trn ($475bn) in assets from their initial public offerings.
Asia ex-Japan retirement funds are expected to continue to lead its competitors, with a CAGR of 11.9% between 2020 and 2025.
The Asian market is also the popular option for big pension funds and to fixed income investors, as it currently offers better yields than bonds in developed markets, said the research firm.
“Investors around the world believe that emerging markets, particularly in Asia, are making better progress in their economic recovery from COVID-19. As a result, they are keen to increase their exposure to such markets,” said Schnurrenberger.
