Global asset managers will find themselves increasingly under threat as local Chinese managers build out their capabilities to service the assets set to flow into the Greater China region.
According to research by consultancy Z-Ben Advisors, the Greater China region, that is Hong Kong, Taiwan and the Mainland, is due to attract "massive new asset inflows".
Z-Ben said that there is now more demand for Mainland A-share exposure. As a result, the market will see the emergence of new competitors able to offer substantially higher allocations to mainland equities that global or regional fund managers can offer: Chinese domestic asset managers.
"Not only will they have more experience and a stronger roster of portfolio managers, cash-heavy operations will also enable Mainland firms to purchase offshore managers outright, potentially sidestepping early hurdles for product distribution," the consultancy said.
The firm's research revealed that eventually, Chinese managers will "be able to offer superior returns and greater access to global institutional investors. This will have a material impact on fundraising results for Greater China-themed products, as international managers find that their existing advantages are slowly eroded".
In view of this, Z-Ben said global asset managers will be forced to build up other capabilities.
©2011 funds europe