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Wealth and Assets: Open Sesame

Jan 29-2021   



2021 marks the first year of China’s 14th Five-Year Plan and ushers in a new era of China’s capital market. In a recent forum, Prof. Huang Zhuo of the NSD spoke on the opportunities and challenges for investors and wealth management at a time of tectonic shift.

 

Confronted with two major challenges - the trade war with the US and the COVID-19 pandemic, China has dealt with both rather successfully. Based on current foreign exchange rate, China’s GDP had reached 75% that of the US by the end of 2020 and can be expected to catch up in eight to ten years.

 

With regard to China’s capital markets, the dual-circulation new development pattern outlined in the 14th Five-Year Plan offers a promising macro-economic context. Listed companies catering to consumer demands will be most favorably affected; Technology firms will benefit from China’s determination to improve innovative capabilities; And financial firms will play its due role of supporting the growth of the real economy.

 

China has managed to stave off major financial crisis for some years, a feat in the face of some criticism of its financial markets being not market-based enough. Also to China’s credit is its effective handling of some Grey Rhinos: shadow banking, real estate, and P2P lending, among others, thus shaping a healthy and stable environment for the development of its capital markets.

 

In 2021, China’s monetary policy can be expected to continue its prudent streak, setting the stage for the gradual building up of a bull market. Some wealth-creating opportunities can be identified in the capital markets. The first one lies in equity assets. Banks are likely to invest more of the wealth under their management in equity assets. The rapid growth of mutual funds also testifies to such a trend. The second opportunity derives from the continuous enhancement of the quality of the A-share market, which leads to safer and higher returns at lower risks. Another opportunity is that wealth management is entering the era of asset allocations as China’s core assets are being re-valued upward by both global and domestic investors.

 

Prof. Huang is NSD Fa Shu Scholar and associate professor of economics, as well as deputy director of PKU Institute of Digital Finance. His research covers financial econometrics, empirical finance, financial engineering, fintech and big data analysis.

 

 

Wealth and Assets: Open Sesame

Jan 29-2021   



2021 marks the first year of China’s 14th Five-Year Plan and ushers in a new era of China’s capital market. In a recent forum, Prof. Huang Zhuo of the NSD spoke on the opportunities and challenges for investors and wealth management at a time of tectonic shift.

 

Confronted with two major challenges - the trade war with the US and the COVID-19 pandemic, China has dealt with both rather successfully. Based on current foreign exchange rate, China’s GDP had reached 75% that of the US by the end of 2020 and can be expected to catch up in eight to ten years.

 

With regard to China’s capital markets, the dual-circulation new development pattern outlined in the 14th Five-Year Plan offers a promising macro-economic context. Listed companies catering to consumer demands will be most favorably affected; Technology firms will benefit from China’s determination to improve innovative capabilities; And financial firms will play its due role of supporting the growth of the real economy.

 

China has managed to stave off major financial crisis for some years, a feat in the face of some criticism of its financial markets being not market-based enough. Also to China’s credit is its effective handling of some Grey Rhinos: shadow banking, real estate, and P2P lending, among others, thus shaping a healthy and stable environment for the development of its capital markets.

 

In 2021, China’s monetary policy can be expected to continue its prudent streak, setting the stage for the gradual building up of a bull market. Some wealth-creating opportunities can be identified in the capital markets. The first one lies in equity assets. Banks are likely to invest more of the wealth under their management in equity assets. The rapid growth of mutual funds also testifies to such a trend. The second opportunity derives from the continuous enhancement of the quality of the A-share market, which leads to safer and higher returns at lower risks. Another opportunity is that wealth management is entering the era of asset allocations as China’s core assets are being re-valued upward by both global and domestic investors.

 

Prof. Huang is NSD Fa Shu Scholar and associate professor of economics, as well as deputy director of PKU Institute of Digital Finance. His research covers financial econometrics, empirical finance, financial engineering, fintech and big data analysis.