A perfect storm

Domestic institutions, HNW, mass affluent and retail investors are currently at the initial stages of what appears to be the largest shift in investment habits since mutual funds took center stage in 2007: they are all looking outbound. Z-Ben Advisors acknowledges that all of these investor groups will vary in the way they move: reallocations will differ in pace, target assets and choice of outbound channels. However, the directionality is clear.

In this publication we have identified the key elements of an outbound investment storm brewing onshore. More importantly, we offer an on-the-ground insight into how these elements are affecting different investors onshore:

• Accelerating push factors are structural and lasting: in concert they are reformulating Chinese investor demand for offshore exposure.

• These investors are, as a group, reacting not only to recent local market volatility but, much more importantly, to fundamentally changed expectations about how the government intends to manage China’s economy.

• Supply creation from global managers remains the final piece of the puzzle. This will intensify competition in the immediate term.

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