How do you ensure certainty and opportunities amid volatile global financial markets? The answer is obvious for Beijing-based finance executive Samuel Fischer when he says the Chinese market is “unmissable.”
Born and raised in Switzerland, he first came to China as a college student in 1999 and was greatly attracted by the Chinese culture. After living and working here for nearly two decades, Fischer, the 40-year-old head of China onshore Debt Capital Markets for Deutsche Bank, has discovered a new allure in the country’s financial sector.
“It’s a whole new market. It’s large and evolving, and it has always been a market full of opportunities and a place where new businesses are built. This is something few other markets can offer,” he said.
As the world’s second-largest economy, China is one of the most popular destinations for foreign investment, and its appeal has become even stronger over the past decade due to the steady financial opening-up.
Foreign ownership caps were scrapped for securities, fund management, futures and life insurance firms, allowing multinationals to have a larger and stronger presence here. Cross-border stock and bond connect schemes were launched to offer overseas investors easier access to the country’s rapidly-growing markets.
Reform and opening-up is crucial for China’s financial modernization, Chen Yulu, vice governor of the People’s Bank of China, told a press conference recently.
With wider opening, foreign financial institutions have played a more active role in the financial sector.
In 2021, the capital and assets of foreign banks in China both increased by more than 50 percent compared with ten years ago, and for foreign insurance companies, the figures surged by 1.3 times and 6 times, respectively.
Overseas investments in Chinese securities were 2.16 trillion U.S. dollars at the end of last year, up by three times from that of 2012.
Major global benchmarks like MSCI, FTSE Russell and the S&P Dow Jones have included the A-shares and strengthened their weightings. China’s government bonds also made their way into three major global bond market indices.
With the Chinese market opening up quicker than expected, Deutsche Bank has made significant progress in obtaining financial licenses and expanding its Panda bond business in recent years, Fischer said, describing the bank as “a beneficiary of and active participant in China’s market opening.”
For many global financial companies, the Chinese market is irreplaceable.
While booming enterprises brought about fast growth in investment bank business including initial public offerings and mergers and acquisitions, an enormous real economy created vast credit and risk management markets, said Liang Haiming, chairman of China Silk Road iValley Research Institute, adding that high savings and increasing household wealth also led to enormous asset management demand.
Moreover, China has become the world’s second-largest bond and stock market and the largest commodity futures market.
Currently, the recovery of the global economy remains slow, weighed down by skyrocketing inflation, clogged supply chains, and a food and energy crisis. In contrast, China stands out as an assured certainty for the world, thanks to its steady economic growth, increasingly open financial sector, and vibrant markets.
“Looking ahead, China’s financial sector will remain committed to unremitting reform and opening-up to ensure long-term stability,” Chen said.
Global financial institutions including Credit Suisse, Goldman Sachs and Citi are stepping up their investment in China, with moves to increase yuan-denominated assets, set up new branches and invite more Chinese financial talent.
“China has made substantial progress in opening its financial market and integrating its market into the global markets over the past few years. We definitely expect that momentum will remain strong,” Fischer said.
“We are strong believers in the long-term growth prospect and the abundance of opportunities that the Chinese financial market and its continued development offer,” he added.