Skip to content
Subscriber Only

Health-Check Time for China Funds

The mainland's asset management sector has grown explosively. One analyst says now's the time to step back and reassess for long-term growth

The recent implosion of global equity markets has had a rapid and pronounced effect on China's exuberant stock market. By the end of January, the benchmark Shanghai Composite Index was down nearly 30% from its all-time high of over 6100 last October. Despite this recent correction, however, the long-term prospects for China's equities market, and subsequently for its burgeoning asset management industry, still look quite promising. A recent study by McKinsey & Co. predicts China's asset management market will have more than $1 trillion in assets under management (AuM) between 2012 and 2015.

For the asset management market in China, the past two years have seen some truly remarkable developments. Take mutual funds. In January, 2006, there were around 20 million mutual fund holders in China, with total AuM of around $50 billion. By January, 2008, over 100 million mutual fund holders held assets of around $450 billion. By comparison, it took 10 years for the mutual fund industry in the U.S. to grow from $100 billion to $1 trillion in assets. What took the U.S. a decade to achieve, China has accomplished in just two years.