China Inbound Investments

Investments into China have been a core strategic priority for investors, market places and intermediaries ever since the first Dim Sum bond was issued in 2008.
But what do global investors need from the Chinese markets? What is holding back their investments and what would trigger greater capital inflows into China in the near future?

Download each year's insights and market feedback here:

Simplicity and transferability as the new priorities

Today we are seeing a China Access story that is increasingly split into two parts.

For the first wave of experienced China players, we may have done enough to meet the technical criteria for index inclusion but there are continuing pressures to normalise market rules and to improve overall usability. The concept of fungibility and transferability between channels has come to the fore (as investors seek to remove risk by consolidating operating models) as have challenges in account opening (linked largely to continuing, high-pressure index inclusion events).

But in parallel we now have a constituency of newer China investors who, seeing China as an investment destination for the first time, expect the market to be as simple as any other: with one access route, one operating model and an application process that is simple. This puts great pressure on Banks and service providers to move away from today’s “what do you need?” complexity towards a simple “gateway” offering for China.

Tomorrow’s China roadmaps need to cater to that desire for simplicity – so that we can sustain the record-rate of asset flows from the last few years.

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A new era and a new breed of China investor

In 2014, foreign holdings of Chinese securities made up less than 1% of the total Chinese markets. Since then, we have begun to witness a landmark transfer of over USD740 billion into Chinese securities, taking the level of foreign participation to 4% today – and climbing.

With many of the largest index inclusion events now behind us, foreign flows into China are now driven more by market factors than by the prospect of new index weightings changes

In 2014, foreign holdings of Chinese securities made up less than 1% of the total Chinese markets. Since then, we have begun to witness a landmark transfer of over USD740 billion into Chinese securities, taking the level of foreign participation to 4% today – and climbing.

With many of the largest index inclusion events now behind us, foreign flows into China are now driven more by market factors than by the prospect of new index weightings changes. Repeated, successful index rebalancings have not only driven large numbers of passive investors to open accounts in China, but they have also created a growing community of investors who are comfortable stock-picking in China and who see Chinese investments as increasingly core to their global exposures.

With 98% of investors ready to see their China holdings grow, the next phase of this market’s evolution will be driven not only by experienced, China experts but also by an increasingly diverse range of market participants (including hedge funds, ETF managers and wealth managers in the US and Europe).

. Repeated, successful index rebalancings have not only driven large numbers of passive investors to open accounts in China, but they have also created a growing community of investors who are comfortable stock-picking in China and who see Chinese investments as increasingly core to their global exposures.

With 98% of investors ready to see their China holdings grow, the next phase of this market’s evolution will be driven not only by experienced, China experts but also by an increasingly diverse range of market participants (including hedge funds, ETF managers and wealth managers in the US and Europe).

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Download the key statistical insights from our industry-wide research here

Download the key statistical insights from our industry-wide research here

Download the key statistical insights from our industry-wide research here

Download the key statistical insights from our industry-wide research here

Download the key statistical insights from our industry-wide research here