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Perspectives: Investment in China
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Yimei Li, CEO, China Asset Management Co., joins Tian Lu, CEO, HSBC Qianhai Securities, for a discussion about China’s investment landscape, against a backdrop of trade tensions and economic headwinds.
They discuss the macro outlook for China and government policy support, developments across the Mainland-Hong Kong Connect schemes, China’s innovation economy, and the growth of exchange-traded funds (ETFs).
Watch or listen to understand more about asset management in China.
This episode was recorded on the sidelines of the HSBC Global Investment Summit in Hong Kong on 25 March 2025. Find out more here: grp.hsbc/gis
Disclaimer: Views of external guest speakers do not represent those of HSBC.
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Transcript
Introduction to HSBC Perspectives and Guest Speakers
00:00:05
Speaker
Welcome to Perspectives from HSBC. Thanks for joining us. And now on to today's show.
00:00:13
Speaker
Thanks for joining today's episode of our perspective series. I'm Tianlu, CEO of the HFPC, Shanghai Securities, and I'm delighted to be joined by Yimei, CEO of China AMC, one leading asset manager in China.
00:00:27
Speaker
So
Megatrends and Predictions in China's Asset Management
00:00:28
Speaker
let's start you know right into the questions. Yimei, what's the megatrends you are seeing in China's asset management industry? I think there are but definitely a lot of things going on in asset management industry in China.
00:00:43
Speaker
And one really is this year I think will be a comeback year for equity investments. And also at the same time we hope will also be a good year for active investments.
00:00:54
Speaker
And if
ETFs and Investment Confidence in China
00:00:55
Speaker
you follow Chinese market and you probably know that in the past several years Well, especially ETF products is really taking the lead in the market.
00:01:05
Speaker
And there has been a lot of arguments or even doubts about really active will continue to generate alpha. And also people have been really not very confident in the equity investments.
00:01:20
Speaker
So I think this year probably going to be a very different U-turn in a lot of the past trends. And this definitely is going to be friend and center in the development in the asset management industry.
00:01:33
Speaker
Well, the big picture certainly is that how well can you invest in China and how our wealth generation will continue to create opportunities to the whole wealth management in China.
Policy Support Amidst Economic Challenges
00:01:46
Speaker
So you may, let me ask a question on macro outlook. We have a lot of things on the doorstep, in particular with the National People's Congress got underway in March earlier this year. Against the backdrop of some you know trade tensions, some economic headwinds, there are also some policy supports being announced in that session.
00:02:06
Speaker
So what are these policy supports and how has the market reacted to that? Yeah, I think
Government's Role in Economic Growth and Innovation
00:02:11
Speaker
everyone ah actually has really been keen, i think two weeks ago to really look into the policy support from our two national sessions.
00:02:21
Speaker
um I think, well, it's very clear that we have a very full support from our central government, especially on the whole economy re-energized side.
00:02:34
Speaker
yeah And we can see that the central government really target again the 5% growth, which I do think is one of top growth around the world, right? yeah Even though people always have certain higher expectations for China, it's like your kids already in school and ranking top and you just want them to win the Olympics and then again and again.
00:02:57
Speaker
So I think the central government really are targeting a very health healthy um growth rate for China. At the same time, we have been seeing we've raised the the fiscal deficit ceiling 4% and 100% increase from last year.
00:03:13
Speaker
and one whole percent increase from last year And that that really is a huge support from the government side to deal with the current, a lot of lingering issues in you know local debt and et cetera.
00:03:27
Speaker
So at the same time, we have seen the continuous support of the central government on the innovation side, on the infrastructure side, and at the same time also trying to boost the you know consumption from the local Chinese people.
00:03:44
Speaker
All that in play, I think, are the very strong support for going forward economy. I think coming back and the same time for the capital market.
Technological Advancements and Innovations in China
00:03:54
Speaker
I know you also have a very strong view on China's you know technology industry and potentially products you know around our theme. So is there anything you can share around that?
00:04:04
Speaker
My theory is really that China is very much like a large manufacturer model. you know When we say like large language model really is the new trend for AI, and we've seen that all the training, all the data feeding into the large language model, model and finally emergence happened.
00:04:26
Speaker
For example, the open AI moment, and we've seen that all the data, all the training really push the AGI to be a possibility. And if you think China as a whole, China's manufacture and technology as a whole, if that could be one model, in the past 40 years, I think all needs and all the manufacturer products, data around the globe actually were training China.
00:04:53
Speaker
Yeah. And then now I think the emergence really happened so that people were shocked yeah that we have the deep sick moment. yeah People were shocked that we have a robotic moment.
00:05:05
Speaker
So I do think that technology in China is entering a different phase. and as value investor and the fundamental analyst in China, we are not surprised because this is what we have always believed in.
China AMC's Focus on Tech and Global Innovation
00:05:21
Speaker
For China EMC, in the past three years, we launched so many active funds and also ETF funds themed and also concentrated to the investment in technology and in the next generation of technology.
00:05:37
Speaker
And that, I think, going forward investors will enjoy the growth in that area in China. We are very excited. Yeah. I think one narrative is that you know a lot of the investors used to see the pressure faced by the private sector, you know private entrepreneurs in China.
00:05:56
Speaker
So many of them were like, hey, you know the deep seek moment, you know that's how could that happen? Yeah. Of course, the new narrative is that you know it really shows that the animal spirit of the private entrepreneurs is still here, right? Yeah.
00:06:08
Speaker
Yeah. And also, I do think that DeepSeek is also one of showcase that um you know all the young people yeah in China and their dream is not to follow.
00:06:22
Speaker
Their dream is really to lead, to be one part of the contribution to the whole leading forces in the human generations. So it's's I think it's our way to contribute back because we actually benefited from so much innovations around the globe.
00:06:39
Speaker
And now it's our time that we can be part of that leading force. It's so exciting. Yeah,
Hong Kong's Role in China's Financial Ecosystem
00:06:45
Speaker
so next topic, you know given we are in Hong Kong, yeah Hong Kong is a super connector in the financial world for China and the world.
00:06:51
Speaker
And we know that you know in the last sort of couple of years, there's been a lot of mutual access and so-called cross boundary products, you know ETFs, you know Wells Connect, and also mutual recognition funds.
00:07:06
Speaker
um How much can that further go in your mind? you know Do you see like more connect schemes, um and you know what's the opportunities for you for for China AMC?
00:07:18
Speaker
Well, we certainly are very very excited. Well, we have been really one of the big beneficiaries of Search Connect program because China AMC we have been one of the largest multi asset manager in China. We have now 2.8 trillion RMB AUM and we have been like our version of seeing it is like we like we are like the Legos in the asset management industry yeah and we are building all the building blocks like Legos to build different asset classes and even
00:07:55
Speaker
microasset classes so that our wealth management partners or asset allocations can utilize them to build customized portfolios for our end investors.
00:08:06
Speaker
So Hong Kong really was front and center in the internationalized process of our asset creation and asset allocation. It's so important to us.
00:08:17
Speaker
So the past 10 years, all the Connect schemes were really very useful for China EMC and the whole asset management industries to get access to international asset classes, to international you know different opportunities.
00:08:34
Speaker
So now for China EMC, we use certain connects as we were we are the largest ETF provider for Hong Kong Index, Hong Kong Technology Index, Hong Kong Healthcare Index.
00:08:50
Speaker
So we were one of the largest, I think, index creators in China to utilize the k Connect scheme. And going forward, I think for Chinese wealth management,
00:09:05
Speaker
The more internationalized, the more asset classes we have accessed accessibility, I think the better portfolio will be for our investors.
00:09:16
Speaker
Because for one single country, single class is too volatile for our investors. And that's why the investors were not being able to hold on long enough to our hour instruments yeah right so i think definitely we are looking forward to use hong kong as our center point in internationalization of our investment capabilities in the internationalization of our investment vehicles and also alternative vehicles as well because we were the first one to launch the first patch of bitcoin etf last year
00:09:53
Speaker
That's right. Yeah. And this year we also launched our tokenized money market fund yeah in Hong Kong, which is so exciting as well. So
Growth in Consumption and Market Potential
00:10:02
Speaker
we really hope that the connect scheme will be more and the more broader and the quotas will be bigger so that it will fit into the huge appetite for our wealth management for domestic Chinese investors.
00:10:17
Speaker
Yeah. So let's switch back to to the investment themes. So we talk about technology which you are very positive about and you China AMC has always always been a and investor and the long-term investor in the technology sort of you know industry I've seen. and The other one is consumption.
00:10:36
Speaker
um you know we've already seen some repricing happening in the consumer sectors, but also you know with the Consumption Promotion Act being announced very recently.
00:10:51
Speaker
What more are you expecting? Do you see see opportunities in China you know consumer space? Definitely, I think Chinese people, well we both share our genes from our Chinese heritage that we are very prudent people.
00:11:05
Speaker
So when spending I think because we came from well not poverty but ah long term of really starting to accumulate wealth. So I think the consumption idea is quite different generations by generation.
00:11:20
Speaker
And from this time, the Nejia movie, that is a huge hit around the whole country. You can see that's the record high for one single market.
00:11:33
Speaker
around the globe. So this shows how big our consumption market could be. Yeah. Just by one single movie, right? So I think consumption really is something that people when they are comfortable, when the wealth creation and the wealth reserves are enough, I think people start to be more comfortable in investment and at the same time in consumption.
00:11:57
Speaker
And certainly this time around, I think the subsidies from the government also play a great role. And then you can see that consumption in the past quarter ah this year actually is already picking up. yeah And from the spring festival, all the headcounts in travel and only, I think it's it's also record high already.
00:12:19
Speaker
So this time a around, guy I definitely think it's a long term. It's not something just happened overnight, but we see the grand trend. in domestic consumption to start building up year by year.
00:12:31
Speaker
Yeah, so just talk about wealth creation, wealth accumulation. Welles is you know a rising force in asset allocation. I've got you know some numbers. So one estimate is that in the 92 trillion US dollars of new financial wells is to be created between 2023 and 2028.
00:12:51
Speaker
And also
China AMC's Transformation to Wealth Management
00:12:52
Speaker
Asia countries contribute to 30% of that. How is the wealth creation you know shaping China AMC's pipeline? Yeah, I think the well ultimate goal of every single asset manager really is to to be able to create value for the wealth of the general public, including retail investors and at the same time institutional investors.
00:13:15
Speaker
So for our, I think, long term vision is really to be the best wealth manager on top of being the best asset manager. yeah Because in China, I think it's very different ecosystem than in the from like for example in Hong Kong or even in the US because I think there are so many financial advisors in you know developed countries but in China I think when people buy one single product in their mind they are buying a solution
00:13:47
Speaker
So it's not just about one single product if it's an instrument. instrument So for China AMC, we are not going to just be the Lego, you know, all the instruments creator.
00:14:01
Speaker
At the same time, we need to be able to buy build. Yeah. different you know architectures or superheroes or cars with our Legos, right?
00:14:13
Speaker
So we want to be able to customize solutions to our end investors, no matter is retail investors for their pension, for their education, or for our institutional investors for their longer investment objectives.
00:14:30
Speaker
So we not only want to be the asset manager. We need to be able to transform into wealth manager at the same time. So the end solution, the asset allocation and the way to customize ourselves to see the needs, I think is going to be our major you know objective and strategy in the future. And talking
Growth of ETFs and Thematic Focus
00:14:52
Speaker
about building blocks or products, exchange traded funds, ETFs, you know you are one of the largest ETF providers in China and ETF is an area we are seeing enormous growth.
00:15:05
Speaker
Again, I've got some numbers here. ETF AUM crossed 15 trillion globally in 2024, and there was a record inflow of ETFs globally, 1.8 trillion US dollars.
00:15:20
Speaker
In addition to that, there are cross listings which are gaining momentum. you know In fact, earlier this year, I think you shared that you are waiting for approval to launch a cross listing ETF in Brazil, which will be the first in its kind.
00:15:39
Speaker
um So talk us through the opportunities you are seeing um that product. Yeah, I think you're right that ETF is one of the most important building blocks within our multi asset platform. yeah And ETF certainly has a lot of advantage because it's low cost, it's very transparent, and then it's very easy to use in asset allocation because it's so stable.
00:16:03
Speaker
So ETF has been ah one of the most popular ah instruments, I think, globally. And in China, the development rate is so high. I mean, the first trillion RMB in ETF takes, guess, 70 years. Right. Yeah. And then the second trillion took only like less than three years.
00:16:28
Speaker
And the third trillion took like 10 months. So this is how fast the whole ETF market has been growing in China. And i think now it's not just domestic ETFs.
00:16:40
Speaker
like going back to the wealth management, going back to multi assets, going back to internationalized asset allocation. We want to introduce more asset classes, more diversified instruments into Chinese market.
00:16:55
Speaker
So your Brazil case is only one of them. So we also actually years ago we launched the one Japanese ETF connect in China. And probably we are also going to include more and more by region, maybe also by sector and also by cross, I mean different value chain to create different asset classes for our investors.
00:17:20
Speaker
And also for the benefits of the listeners, you know we talk about some of the cross-border ETFs actually in addition to the one you know you talk about with Brazil, that's being in Saudi Arabia, Japan you talk about, and it's also sort Singapore.
00:17:34
Speaker
But they are also growing interest in thematic ETFs. you know Internet, semiconductor, AI, um and you know ah the what's your outlook for the year ahead in terms sort of thematic scenes?
00:17:49
Speaker
You're expecting that international investors and many investors you know we will rally around. In the past several years, the growth in ETFs really mainly came from ah the major indices like CSI 300 because the market was going down. yeah So I think long term investor really took opportunity to ah to make asset allocation investment in you know within very low market capitalization.
00:18:22
Speaker
But this year, since the market rebounded and we've seen a lot of you know movements into the technology sector, I think it's quite naturally the thematic ETFs, especially rally around technology, will be front and center in a lot of investors' minds.
00:18:39
Speaker
And I will just give you one example. We actually launched our robotic themed ETF like several years ago and we it was so small. No one was paying attention. So it was even less than one 100 million RMB in AUM. Can you imagine that small? yeah And then in the past half year, because of the robotic movement and innovation in China, and this one single ETF raised into more than 10 billion RMB just in half a year.
00:19:14
Speaker
So you can see how fast the investors actually are react reacting to all the innovations and technology at advancement. And we do think that it's not just about one thing.
00:19:27
Speaker
is going back to the China being you know the motivated um leading force in all sectors, cross-board in technology.
00:19:39
Speaker
So we are very much looking forward to this year. A lot of the cinematic funds actually are going to be quite popular both for domestic investors and for international investors.
HSBC's Role in Thematic ETF Innovations
00:19:51
Speaker
At the same time, thank for ah the stock and ETF connect. A lot of the international investors actually can have access for our thematic ETFs in Hong Kong.
00:20:03
Speaker
yeah And i I do think that HSBC is a great partner for China EMC in the past, so that together we created so many different instruments as well. So we really hope that this year is going to be quite a good year for our thematic products, including ETFs and equity funds.
00:20:21
Speaker
Yeah. ah While talking about robots, we actually you know have a few robots actually just behind us. So I really hope, well, I wish our listeners you know could be here at our scene. um
Conclusion and Appreciation
00:20:32
Speaker
That's actually um all the time we have today. you know We talk about policy support, we talk about the vibrant technology industries in China, we about the opportunities for China asset management industry, in particular for our you know leaders in the industry like China AMC.
00:20:48
Speaker
On behalf of the listeners, I'd like to thank Yimei for your presentation in our episode today. Well, thank you so much for giving this opportunity and hope this year we will all have a very good year. Thank you. Thank you.
00:21:00
Speaker
Thank you for joining us for this episode of Perspectives. Make sure you're subscribed to HSBC Global Viewpoint to stay connected.