Mutual Opportunity in China

Thomas Tsao

Thank you, Mark. Good morning, again. I will spend the next few minutes to brief you on Prudential’s mutual fund business funds in China. But let me tell you this upfront we will submit our application for mutual fund license very very soon, and again because of regulations we are teaming up with CITIC, our old life joint venture partner, which is doing a lot of help to our business in China. And also I would like to stress one difference between life business, like mutual fund business, our mutual fund license is a nation-wide license. It’s not like life, so we can start selling funds from the first day to all people in China. Next I’ll give you some ideas about China’s growth although I assume you all know much much better than that, than me. I think from this slide you will see China has been enjoying quite quick growth and bank deposits is a good symbol that showed the growth as well as the people’s still putting money in the banks. And if you compare with the US, or other places in Asia, we got very high percentage of money lying in the bank, and the mutual funds are very small. If we can get some how to maybe remove few percentage points it will already be a huge size. Here we would like to demonstrate to you at although China has been growing real fast, however the financial vehicles are still relatively small. As you can the market cap of the stocks as well as the bond are in the range of around £200 - £300 billion British pound but let me give you a figure, the most updated bank deposit that China has round £900 billion British pound. So this is really a huge potential that we have been facing. And the last slide I want to show you is, this is the existing mutual fund industry in China. As you can see the numbers are even smaller. The total fund size now is around £17 billion British pound, and has already over 140 funds but starting from ’98 it’s already growing very fast. The first mutual fund came to life in ’98 in China, and I think further the big jump will happen in the future when more and more investors can put confidence in the mutual fund industry. Finally, I think I will come up with some quick summary for you that I think again, China will continue to grow very very fast. Economy itself has proven to that reaction. And second, although China’s mutual fund industry is very very small but I think it has been growing very fast in the past and I assume it will grow further in the future. I think the industry itself the growth potential is simply too big and I think Pru is ready to grab this chance, or opportunity for further growth in the mutual fund business in Asia. And very last, I would like to share with you my personal experience that besides from what you have heard form all of my colleagues, talking about customer needs, brand, distribution and all that, I think there are two more points that are very favourable to Pru for the future for our mutual fund business in China. First of all I think our team in the regional sense that this team has grown with tremendous growth and very good experience for the past five years. We have grown a lot of green fields operations from nowhere and to where we are right now. We have very good teamwork amongst ourselves to share all the ideas, knowledges and help each other on the way, and I think it is going to do a great deal to China’s future growth. And secondly this afternoon you will hear about my great colleagues captain will tell you about how our life operation has gone through its very first growth in China already, and after four years I think they’ve got tremendous business already and it will help us dramatically by setting up very good base for people to know Prudential, in terms of quality, brand and all the confidence. So I’ll wrap up right here and give back to Ajay for our session. Thank you.

Ajay Srinivasan

Thanks, Thomas. I think if we get a license every time you guys come back here based on what Thomas said we’d like to call you back I the next couple of months so that we can get our China license. But what I would really like to do in this last session before lunch is to set out what we see as the drivers for the growth of funds in Asia, and how we see ourselves positioned against some of these. We believe there are several good reasons for the growth of Mutual funds in Asia.

Close this window