Goldman Sachs, United States

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Goldman Sachs & China’s Largest Bank ICBC Receive Approval for China Wealth Management JV

26th May 2021 | Hong Kong

Goldman Sachs Asset Management and China’s largest bank ICBC (Industrial and Commercial Bank of China), have received preliminary approval from the China Banking and Insurance Regulatory Commission (CBIRC) to form a wealth management joint venture in China.  The joint venture will be 51% owned by Goldman Sachs Asset Management and 49% by China’s largest bank ICBC (Industrial and Commercial Bank of China).

“Goldman Sachs & China’s Largest Bank ICBC Receive Approval for China Wealth Management JV”

 

China Financial Market Allows Increased Foreign Ownership, Participation

The branch of Industrial and Commercial Bank of China

In 2019, China’s Financial Stability Development Committee announced plans to open up the financial market in China, including easing foreign ownership limits for certain financial services.  

With the preliminary approval, Goldman Sachs joined international asset management firms, BlackRock, Amundi, Schroders and JP Morgan in establishing joint venture with the largest banks in China.  

 

BlackRock, Amundi, Schroders, JP Morgan in Partnerships with China’s largest banks

Bank of China

Earlier in May 2021, BlackRock, the world’s largest asset manager with $9.01 trillion AUM, received approval for a wealth management license in China in a joint venture with China Construction Bank and Temasek (Sovereign Wealth Fund of Singapore).  The joint venture, BlackRock CCB Wealth Management, is 50.1% owned by BlackRock, 40% by China Construction Bank and 9.9% by Temasek.

French asset manager Amundi has also setup a wealth management joint venture with Bank of China, Schroders is partnering with Bank of Communications while JP Morgan is partnering with China Merchant Bank.

Asset Managers and Chinese Banks Partnerships:

  • Goldman Sachs and ICBC (Industrial and Commercial Bank of China)
  • BlackRock and China Construction Bank (& Temasek)
  • Amundi and Bank of China
  • Schroders and Bank of Communications
  • JP Morgan and China Merchant Bank

 

China, $14.3 trillion Economy

Shanghai Pudong City | Leading Financial Centre in Asia

China is the fastest growing economy in the world and home to the fastest growing companies, billionaires, UHNWs & HNWs.  China is the 2nd largest economy in the world with GDP of $14.3 trillion in 2020, representing 16.34% of global GDP ($87.7 trillion).  China also has the largest population in the world with 1.39 billion, representing 18.21% of global population (7.67 billion).

China also have 3 of the world’s largest stock exchange – Shanghai Stock Exchange, Hong Kong Exchange and Shenzhen Stock Exchange. In the 2021 Global Financial Centres Index 29 Report, 4 of China’s cities are in the top 10 ranking – Shanghai, Hong Kong, Beijing, Shenzhen. 

 

Greater Bay Area, Wealth Management Connect

Shanghai, China

China has also created many new initiatives, including the Greater Bay Area, Wealth Management Connect connecting Mainland investors to investment opportunities in Hong Kong and internationally, and vice-versa, allowing investments into China via Hong Kong.  

The Wealth Management Connect was proposed to allow investors between Mainland China and Hong Kong to open banking & investment accounts, invest in stocks & bonds, purchase financial products and remit renminbi (RMB / CNY) & foreign currencies.

In May 2021, the Central Bank of China and China regulators have set a net $23.2 billion (CNY 150 billion) quota for the Wealth Management Connect in the Greater Bay Area, comprising of Guangdong, Hong Kong and Macao with total GDP of $1.64 trillion and population of 71.2 million people and GDP per capita of $23,075.

The net cashflow movement between Mainland China and Hong Kong cannot exceed $23.2 billion (CNY 150 billion) while the individual investor investment quota is set at $155,000 (CNY 1 million).

 

Capital Market Connectivity Schemes

UBS office in Kowloon, Hong Kong

Existing capital market connectivity schemes include Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, Bond Connect and Mutual Recognition of Funds.  The new scheme will be Wealth Management Connect.

  • Shanghai-Hong Kong Stock Connect
  • Shenzhen-Hong Kong Stock Connect
  • Bond Connect
  • Mutual Recognition of Funds
  • Wealth Management Connect (New)

 

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