Amundi, Europe’s largest money manager, targets US$600 billion in Asian assets under management by tapping Wealth Management Connect, ESG opportunities

·4-min read

Europe’s largest money manager is aiming to boost its Asian assets under management by 70 per cent to 500 billion (US$591 billion) by 2025, tapping opportunities arising from the forthcoming Wealth Management Connect scheme and China’s drive to achieve carbon neutrality by 2060.

“China’s market is so huge that it is impossible for any investment manager to miss it. The country’s opening up policies to attract foreign investors and its policies to promote environmental, social and governance (ESG) have given confidence to global asset managers to invest in the country,” said Zhong Xiaofeng, chairman for Greater China of Amundi Asset Management.

The Covid-19 pandemic has also encouraged the Paris-based company to invest more in China.

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“The pandemic has led asset management companies globally to further diversify their businesses into more markets because they cannot rely on developed markets which have much slower growth than mainland China, which has seen a quicker economic recovery due to its better control of the pandemic,” said Zhong in an interview.

Amundi, which had 1.76 trillion of assets under management as of March, is joining a wave of fund houses expanding in mainland China and Hong Kong. They are eyeing the launch of the new Wealth Management Connect scheme and China’s moves to improve ESG, according to Sally Wong, chief executive of Hong Kong Investment Funds Association, the industry body of the fund industry in Hong Kong.

Wealth Management Connect is the first cross-border investment scheme in the Greater Bay Area. It will allow Hong Kong and Macau residents to buy mainland investment products sold by banks in the bay area, while residents of the nine Guangdong cities will also be allowed to buy investment products sold by banks in Hong Kong and Macau.

“Wealth Management Connect scheme tops the agenda of many fund houses. This scheme is of huge strategic significance and is poised to be a game changer,” Wong said. “Integration of ESG into the risk and investment management has mainstreamed.”

Amundi had 298 billion in assets under management in Asia as of the end of last year, representing 17 per cent of its portfolio globally. Hong Kong and mainland China accounted for 101 billion, or 6 per cent of the company’s global total.

The company has a long history in China. It set up offices in Hong Kong and Beijing in 1982, just four years after China’s economic reform. It owns one third of a joint venture fund company with Agricultural Bank of China and Chalco Capital, set up in 2008. It has introduced 60 mutual funds and attracted US$77 billion in investment over the past 13 years.

More recently, it set up a 55-45 joint venture with BOC Wealth, a unit of Bank of China. The joint venture, called Amundi BOC Wealth Management Company, is the first foreign majority-owned wealth management company. It has issued more than 50 fund products with over US$5 billion under management, and aims to reach 60 billion (US$70.76 billion) in assets under management by 2025.

In Hong Kong, it has 36 funds sold through 20 distributors and has US$11 billion under management.

Zhong believes Amundi’s two mainland joint ventures and its Hong Kong business will expand substantially in the coming years, as the Wealth Management Connect scheme allows the cross-border buying and selling of fund products via banks.

Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor said on Monday that a launch date for the scheme would be announced soon.

China, which has set 2060 as its target to achieve carbon neutrality, is expected to offer a lot of investment opportunities in green financing in the years ahead, which should bring business opportunities to Amundi, Zhong said. The company added ESG criteria into its investment strategy back in 2010, while its level of “responsible investment” has grown from 32 billion to more than 370 billion in the last decade.

“We do not invest in companies with low ESG ratings as they tend to have problems sooner or later,” he said.

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