Tina Dai, Senior Manager, Enhance International

Speaking at the Asia New Active Investor Symposium, in Shanghai, organized by Institutional Investor.

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China is at the heart of the global economy and of investment markets. As the second largest economy in the world and the largest trading nation, China is the primary source of demand for many global companies. China is also home to the second largest capital market in the world behind the US. The lack of integration of these capital markets is a global economic anomaly. The internationalisation of China’s capital markets - led by internationalisation of the RMB - will prove to be one of the most profound structural changes and sources of growth in the global economy this century.
Capital market liberalisation is a long road and there will be many challenges along the way. However, this should not diminish the inevitable path and the immense opportunity that integration of two mammoth capital markets will create. Not only is China realigning its economy to benefit from its burgeoning middle class, but it is seeking to move up the value chain and to harvest the benefits of innovation and disruptive technology.
As we look ahead, the economic policies and performance of the Chinese economy will be a primary driver of prosperity and investment opportunities not just in Asia but around the world. Part of this natural maturing will be continued growth in China’s domestic pension market and asset management industry. The next phase is for Chinese pensions to broaden their global investments and for domestic asset management firms to attract global clients.
China’s rise is set in the global context of economic uncertainty and, arguably, the most challenging investment environment we have faced for a generation. The global economy is in uncharted waters, which translates into an investment outlook of lower returns, greater disparity in returns across asset classes, and higher volatility.
How are investors responding?
Some institutional investors have lowered, or are considering lowering, their return objectives and are counselling their stakeholders to expect, and prepare, for lower returns. Others are allocating more to alternative assets and accepting more risk in their portfolios, even if begrudgingly, as necessary to maintain an acceptable level of return. Others, again, are exploring opportunities to be more agile or dynamic (or are allowing their fund managers to be unconstrained by benchmarks or asset classes) in the hopes of achieving returns without taking on more risk at the portfolio level. In a small number of cases, some investors have done all three. The relative merits of each of these strategies will become clearer through time, however the challenge for investors is to act today.
Through these challenges, Asian investors are seeing an imperative to continue to grow in sophistication, and are increasingly asserting themselves as important stakeholders globally, across both Private and Public market investments.
It is against this backdrop that the Asia New Active Investment Symposium will be held in Shanghai – a global financial centre –addressing a host of investment, macroeconomic and geopolitical topics relevant to institutional investors.

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STRUCTURAL TRENDS EFFECTING THE CHINESE PENSION SYSTEM AND INSURANCE INDUSTRY
Presentation and Table Discussion with Q&A
China has made great strides in expanding pension and insurance coverage for its population over the last twenty years. Before 1997, state-owned enterprises (SOEs) provided their workers with so-called legacy pensions without regular contributions. Since then, China has established a contributory pension system, which covers a large portion of urban workers. More recently, China has established a pension scheme for rural workers which is also growing significantly.
Meanwhile, life and personal insurance has developed from a virtually non-existent industry to a large, open one. China’s fast growing economy coupled with the largest population in the world, rising personal income, and economic system reform not only explains its rapid growth, but also foretell the increasing importance of China's insurance market in the future.
Presenters:
Tina Dai, Senior Manager, Enhance International
Sub-issues:
• New developments effecting the Chinese pension system and insurance industry
• State Council guidelines and their impact on pension fund portfolios
• Growth opportunities and challenges that Chinese insurers face
• The impact of a growing Chinese insurance sector on the local economy
Investment considerations:
• Implications of Chinese pension and insurance funds significantly reallocation capital
• Opening up of Chinese A-shares to foreign institutional investors
• Chinese institutions now receiving more freedom to diversify asset allocation