China

Standard-Chartered: China's digital transition has just begun

New analysis from Standard Chartered says China’s asset management industry actually shrank in 2018 due to strict new rules imposed by financial regulators.

Total assets under management sold by banks, trusts, funds, brokerages, futures and insurance companies fell for the first time in 2018, to CNY 121.6 trillion at year-end from CNY 124.0 trillion at end-2017. However, a variety of careful policy shifts by Beijing brought a positive trend half way through last year, and led to a mild recovery the second half of 2018.

The Standard-Chartered analysis expects China’s asset management industry to recover in 2019. Financial conditions have eased but more importantly, regulatory authorities have become more receptive to the role of shadow banking in the real economy. While there is no radical change in how the asset management industry is regulated, the grace period to exit non-compliant products will likely be extended.

For non-banks, trust companies and securities firms the new guidelines were especially challenging, while public and private funds continued to grow. As a result, it’s also expected banks will create wealth management subsidiaries and ring-fence the business from the parent bank.