Part I: Volatility, opportunity and competition in Greater China

Z-Ben Advisors’ new research, “China: Integrating, not Emerging” shows how mainland China’s financial services landscape has changed as a reaction to the severe volatility that has emerged over the last several months. The aftermath of this crisis will bring tremendous opportunity for international investment managers, as access to the market is expanded and demand for offshore diversification from Chinese investors increases. Competition will be fierce, however, with North American, European and other Asian firms all targeting the space. Key highlights include:

• Uncertainty for operating within China is driven by a lack of clear policy: this is changing rapidly. The events over the last several months have demonstrated to China the need for liberalization of the financial market.

• The opportunity for investment managers to help Chinese investors is tremendous: demographic forces mean a pension shortfall will emerge in the next several years, and China’s current financial infrastructure is not in a position to cope.

• China now represents one of the largest capital markets in the world, and volatility originating in Shanghai and Shenzhen quickly spread elsewhere in the world. Truly global firms need to better understand the Mainland in order to prepare for these shocks in the future.

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