Last year, ICBC consolidated several asset management operations to create ICBC Asset Management (Global). Bing Li, who leads product development for the new entity, and Harrison Li, who leads global asset management for ICBC, talk about the new entity and its role in supporting the wider ambitions of the bank—and of China itself.
Li Bing |
Global Finance: How is ICBC Asset Management (Global) responding as investors adjust to China’s slowing growth?
Bing Li: We see a downward trend now, and from a global perspective China faces many challenges, especially since a trade war began between China and the US. But China is still one of the world’s fastest-growing economies. It’s also the second-largest economy in the world. So, I think from the country perspective, the “China brand” is good.
Harrison Li: ICBC is the largest institution among bank asset management companies in China, with assets of 2.6 trillion yuan. This provides a diverse product line. For instance, there is a series of products for customers willing to invest in private equity. Currently, China is advocating proprietary business for the “new economy.” These types of products are mainly for investing in private enterprises in industries the nation strongly supports. It can both support national development and meet the needs of customers who expect stable, attractive and reliable returns.
GF: Can you tell us more about “floating return” rules and how you respond to government policy shifts?
Harrison Li: According to new regulations on the asset management industry, a bank must remove “guaranteed returns” for NAV-oriented payment wealth management products, because regulators were concerned about long term development of China’s asset management industry as well as the divergence between international standards and China’s market practice. Under the new regulations, changes have been made to methods of recording losses and profits from many investment products, such as stocks. In the past, it was a test of sales ability. In the future, the test will be about investing ability. For an institution such as ICBC, this challenge is a good thing. Excellent institutions will emerge from market reform.
Harrison Li |
GF: How is ICBC Asset Management (Global) positioning itself?
Bing Li: A key initiative for ICBC Group is to promote its global asset management business as part of ICBC’s internationalization strategy. Investors are looking for asset management professionals who specialize in cross-border investment into and out of China, in order to facilitate their global asset allocations. We have set up a product line that includes a variety of investment products, spanning many risk and return characteristics. We launched a cash-management fund domiciled either in Cayman or Ireland. We launched products for investing in the senior secured loan market in the US, and the Belt and Road Bond Fund for Belt and Road regions. Also, many ETF investments for the equity market that track all Chinese companies listed around the world. We have a platform in Shenzhen for cross-border product equity investment.
GF: What role is ICBC Asset Management (Global) playing in Belt and Road efforts?
Bing Li: ICBC is actively involved in the Belt and Road Initiative by leveraging its 129 overseas entities in over 20 countries and jurisdictions throughout Belt and Road regions. A few months ago, we became the first player to obtain the Luxembourg regulator’s approval to launch a Belt and Road Bond Fund through our USD platform in Luxembourg. Good medium- to long-term investment opportunities for global investors are opening up, thanks to a rising consumer class and economic modernization along the Belt and Road corridor. Investors benefit from global asset allocation, especially relative to efforts to promote renminbi internationalization through the Belt and Road Initiative.
Investments in China over the past few years have been driven by capital account liberalization and consequent global asset allocation demand. Promotion of QFII, QDII, Connect and bond clearance provide investment opportunities for investors who can now tap deeply into the Chinese offshore bond market.
