Interface News Reporter | Ji Yao
The institutional opening-up of the capital market has been deeply promoted, and the convenience for foreign institutions to conduct business in China has been continuously improved.
Recently, Shen Bing, Director of the Institutional Department of the China Securities Regulatory Commission, stated that to promote high-level financial opening in an orderly manner, it is necessary to steadily advance institutional opening such as financial market rules and management standards, guide the agglomeration and development of foreign financial institutions, and better serve the real economy. He also revealed that he will advance in both pension finance and cross-border data flow.
Fidelity International provides investment solutions and services, as well as retirement professional planning, to over 2.8 million clients worldwide, with operations in more than 25 regions and total assets of $861.3 billion. Fidelity International has been deeply involved in investment research in the Greater China region for over 40 years and has been rooted in the Chinese market for 20 years. In January 2017, Fidelity International became the first foreign asset management company to register and establish a foreign private equity securities investment fund manager with the China Securities Investment Fund Industry Association. In December 2022, Fidelity's wholly foreign-owned public fund license was officially approved
Recently, Interface News interviewed Huang Xiaoyi, Managing Director of Fidelity International China and Chairman of Fidelity Fund. She stated that the public fund business is a very important step in Fidelity's long-term development plan. The series of policy combinations introduced at the end of September have brought tremendous confidence boost to the market. From the perspective of foreign participants in the public offering industry, we hope that the Chinese market can continue to explore regulatory methods that are in line with the world while ensuring the stable operation of the Chinese financial system.
Huang Xiaoyi, Managing Director of Fidelity International China and Chairman of Fidelity Fund
Interface News: When did Fidelity enter China and what does the Chinese market mean to you? Can you review the process of your institution entering the Chinese market and how it developed its business layout?
Huang Xiaoyi: China is a long-term key strategic market for Fidelity. As a private company, we have been thinking about our layout in China for a long time. While investing in Chinese companies for the long term, we also hope to help Chinese investors achieve their long-term financial goals.
Fidelity has been deeply involved in investment research in the Chinese market (including Hong Kong, Macao and Special Administrative Regions) for over 40 years. We have also been rooted in the Chinese market for 20 years. In 2004, we established an office in Shanghai, in 2008, in Beijing, and in 2007, we also set up an office in Dalian, establishing our center of excellence for serving global investors in China.
Although the Chinese asset management market had not yet fully opened up to foreign investment at that time, since 2007, Fidelity International has invested in China through the QFII mechanism. Before the cancellation of the QFII quota, Fidelity had obtained a total of $1.2 billion in quotas, becoming the company with the largest approved QFII quota among asset management institutions. At the same time, Fidelity International will also provide overseas capital market allocation opportunities to Chinese investors through the QDII quota of some foreign banks.
In 2011, Fidelity began to establish an investment research team locally and recruited the first batch of analysts in mainland China. In 2015, we established a wholly foreign-owned enterprise in Shanghai to further expand our business in China. In January 2017, we became the first wholly foreign-owned private equity securities investment fund manager in China, providing onshore investment products for domestic institutional investors and high net worth individuals.
With the acceleration of China's financial opening-up, after the lifting of restrictions on foreign shareholding in public fund companies in April 2020, we officially submitted an application for a wholly foreign-owned public fund license to the China Securities Regulatory Commission in May of that year, and it was officially approved at the end of 2022.
In 2023, our public fund company in China will officially open, which is also a very important step in our long-term development plan. At present, Fidelity has successively issued multiple fund products in the Chinese market.
Interface News: In recent years, China's financial opening-up has continued to advance. In your opinion, how effective is the opening-up of China's financial sector to the outside world? What development opportunities and dividends did Fidelity gain in this process? What role has the entry of foreign institutions into China played in the development of the Chinese financial market?
Huang Xiaoyi: The high-level opening-up achievements of China's financial industry have been significant and widely recognized by the international community. The Chinese capital market is steadily growing in the process of two-way opening up, with institutional construction and market mechanisms constantly improving. With the comprehensive opening up of the financial services industry, the convenience and possibility of foreign financial institutions entering the Chinese market have been greatly improved. More and more foreign institutions are expanding into the Chinese market, sharing the dividends of China's economic development, actively expanding their business, and bringing diversified products and services to Chinese investors.
As one of the first global asset management companies to enter the Chinese market, Fidelity International deeply feels the continuous promotion of China's financial opening-up. Thanks to this, we can help Chinese domestic and overseas investors seize opportunities through mechanisms such as QFII, QDII, Shanghai Hong Kong Stock Connect, and PFM. This process also enables us to continuously refine our local investment research capabilities based on Fidelity's international perspective, to learn and understand the Chinese market and investors, all of which are of great significance to our long-term strategy. After the lifting of restrictions on foreign shareholding in public fund companies, we immediately submitted our license application and were approved to expand our business by the end of 2022. This is undoubtedly another important milestone for us in the Chinese market.
With more foreign financial institutions entering the Chinese market, they can bring their accumulated product operations and investment education experience from overseas markets into the Chinese market, helping to better meet the growing diversified investment needs of Chinese investors. At the same time, it will further promote innovation in China's financial products and services, as well as the improvement of industry service levels, introducing a longer-term investment perspective and patient capital to the Chinese capital market.
Interface News: "Expanding high-level opening up to the outside world" is one of the key words in the 2024 Chinese government work report. From the perspective of foreign-funded institutions, how do you understand the term "high-level"?
Huang Xiaoyi: We believe that "high-level" opening up to the outside world means further relaxation of market access conditions, as well as more complete legal and regulatory support, more efficient administrative services, a fairer competitive environment, and broader cooperation opportunities. These are all essential elements for foreign institutions seeking development in China. Therefore, "high-level" opening up to the outside world is not only a positive signal for foreign institutions, but also indicates that the attractiveness and competitiveness of the Chinese market are constantly improving.
Under this development trend, we are also honored to be the first foreign-funded public fund company to conduct business in the Chinese market. We will strive for excellence in product layout and investment performance, serve Chinese investors well, and grow together with the Chinese asset management industry.
Interface News: Attracting more foreign financial institutions and long-term capital to China for business development is one of the important tasks of China's economic development. Do you think the Chinese market should do a good job in this work, so that international investors can truly and effectively enter the Chinese market from their attention? What are the key points?
Huang Xiaoyi: In recent years, with the relaxation of market access, optimization of the business environment, and positive progress in institutional openness and interconnectivity in the financial sector, coupled with the low allocation of Chinese assets by international capital and China's attractive valuation level, more and more international investors have been attracted to enter China to conduct business.
From the perspective of foreign participants in the public offering industry, we hope that while ensuring the stable operation of China's financial system, the Chinese market can continue to explore regulatory methods that are in line with the world, especially in setting business qualification thresholds that take into account the group's history, scale, and experience in overseas markets. For example, policy support in areas such as pension management and cross-border investment can bring more diverse investment choices and better customer experience to domestic investors.
Interface News: With the continuous expansion of China's financial market opening up, what new opportunities and challenges are foreign financial institutions facing?
Huang Xiaoyi: Currently, the Chinese economy is in a period of structural adjustment. In the next few years, the Chinese economy will gradually achieve a shift in momentum and establish a pattern dominated by new economies such as energy transformation, technological innovation, and healthcare. High quality and sustainable economic development is the foundation for the sustained development of the financial industry. Recently, the economic stimulus policies jointly released by multiple ministries have further boosted market sentiment. At the same time, the Central Financial Work Conference pointed out the need to do a good job in the "five major articles" of technology finance, green finance, inclusive finance, pension finance, and digital finance. With the continuous expansion of financial openness, these are expected to continue to promote the business development of foreign financial institutions in China.
Among them, pension finance is an important chapter and a crucial topic that the entire financial industry needs to explore together. In this regard, Fidelity started early overseas, has rich management experience, and is also the company that invented the Target Date Fund (TDF). Fidelity Investments has always been one of the leading managers in the US second pillar pension 401 (k) and third pillar pension IRA markets. Therefore, over the years, we have been continuously sharing Fidelity's experience with industry partners and regulatory agencies, and considering how to better invest in elderly care in China according to local conditions. We hope to continue to provide suggestions and recommendations for the development of China's elderly care security system on this issue.
In addition, green finance is also an area where foreign institutions can fully play their role. Under the guidance of relevant policy standards, Fidelity actively carries out sustainable investment work, while also deeply exploring the difficulties and challenges involved. It actively participates in the formulation process of sustainable investment related policy standards, contributes its own practical experience, ideas, and cases, and supports policy standard setters to further enhance the implementation and effectiveness of China's sustainable investment policy standards. As a leading global expert in sustainable investment, Fidelity International has launched dozens of sustainable investment products worldwide. While creating dual benefits for customers and the economy and society, it actively responds to and follows regulatory and customer requirements, constantly reviewing and updating its sustainable investment product framework to adapt to the current policy environment and development trends. We believe that foreign financial institutions can contribute to the improvement of China's sustainable financial standard system, as well as the sustainable investment and economic development.
In the past few years, the stock market has been under pressure, leading to some foreign investors undervaluing Chinese assets. Fluctuations have also raised concerns among domestic investors. However, a series of policy combinations introduced at the end of September have brought tremendous confidence boost to the market. Since I joined the asset management industry more than 20 years ago, I have experienced multiple economic downturns. The process of bottoming out each time must be agonizing, but as long as you stay in the market long enough, you can appreciate and understand the existence of cycles. The alternation of economic cycles is as natural as the change of seasons in the world. In the cold season, there is often a bright spring scenery lurking, and excellent companies always have the ability to cross cycles.
Lastly, I would like to say that foreign investment has a long history of research and operation experience in multiple global markets. However, I believe that only by fully integrating global experience with local markets can it be meaningful. If foreign institutions, including Fidelity, can explore a path, it will not only be our success, but also have important implications for the long-term healthy development of the entire industry.
Interface News: What is your company's future development strategy and plan in China? How will Fidelity continue and grow its unique strengths in China in the future?
Huang Xiaoyi: Fidelity International has over 50 years of experience in the global investment field, and its advantages lie in its long termism, international experience, ability to cross cycles in investment research, and risk control system. Fidelity has always adhered to the development vision of "in China, for China". We hope to gradually establish diversified asset allocation capabilities in the Chinese market, including stocks, bonds, cross-border, multi asset, ESG, alternative assets, and more. We will continue to enrich the company's product line in the Chinese market to meet the different needs of Chinese investors, including cross-border asset allocation needs.
As the most important first step, we must make the public offering business stable and solid, driven by fundamental research, create differentiated investment plans based on global perspectives and experience, and gradually establish trust relationships with investors through continuous communication and business development activities, laying a solid foundation for development. We only officially launched our business in China last year, and we believe that Fidelity's advantages can be seen for a longer period of time.
As mentioned earlier, pension is an important development direction for us in China. The ability to care for the elderly is rooted in the DNA of Fidelity, which is also the company that invented the one-stop solution for elderly care - the Target Date Fund. In the past few years, we have actively shared with domestic regulators and peers the experience that Fidelity has learned in the global pension system construction process, hoping to provide reference for the development of China's three pillar pension system. We also focus on investor education, release research reports related to elderly care themes, provide the Chinese public with Fidelity elderly care calculator tools, and encourage everyone to make early retirement reserves. In the future, we also hope to obtain the qualification to issue elderly care products as soon as possible, and provide elderly care investor solutions and services for Chinese investors.
We believe that the development of a company must be guided by a strategic business model and an inclusive organizational culture, with a combination of global perspectives and local insights, coupled with the collaboration of good technology and talent, in order to achieve stability and long-term success. Therefore, Fidelity has built a professional, diligent, responsible, and culturally integrated team of forward thinking and intelligent professionals in China, which is the cornerstone of the company's development in China.
We also attach great importance to the empowerment of digital capabilities for our business, as well as the changes that technology brings to the industry. This is also a dividend and opportunity that we, as a new company, can seize. China has a very high degree of digitization, and consumers have diverse channels for receiving information. We hope to fully empower our business with China's leading digital capabilities, utilize data-driven tools to assist in fundamental investment, and continuously strengthen our research and investment capabilities in China. At the same time, we will continue to introduce digital methods in sales, investor education, marketing, and other areas, providing our solutions and services to Chinese customers in an intuitive, participatory, and friendly manner.