Pandemic, Demographics Drive Digital Investment Trend - Report

Tom Burroughes

2 April 2020

The Chinese investment industry is increasingly going digital to cope with the upheaval from COVID-19, driving developments such as online seminars with advisors and clients and producing “blockbuster” fund launches, a report says.

Lockdowns at home mean that investors rely more on the internet to guide decisions, while a younger cohort of Chinese investors, who are typically more tech-savvy, is also pushing this trend, said in a report.

According to surveys conducted by the Asset Management Association of China (AMAC), 36.5 per cent of individual mutual fund investors in China were below 30 years old in 2018, almost double the level in 2013. About 71 per cent used mobile devices as their main investment tools in 2018, compared with only 21 per cent in 2014.

“While COVID-19 has posed some challenges to fund sales and caused some firms to delay their fund initial public offerings, more have started conducting online seminars aggressively. These have received huge interest, and resulted in a number of blockbuster fund launches. At the time of writing, since the start of the year, a total of at least 40 new funds were sold out in just one day,” the report said.

“Fund managers have been digitalizing their marketing and sales strategies over the years to meet the needs of younger investors, from improving their websites to partnering with third-party online platforms and producing more mobile content,” the report continued.

More than 50 asset managers and securities firms, including four foreign managers, have built “Wealth Accounts” on the Ant Fortune app to actively engage with retail investors, it said.

Companies are building profiles on digital platforms which are not strictly financial. For example, managers like Bosera and Yinhua, as well as distributors like Howbuy and Lufax, have built audio channels on Himalaya, a popular podcast app in China.

The epidemic has also been a catalyst to the growth of digital channels. This expansion has not been limited to third-party online platforms, but also includes digital platforms of traditional channels, such as banks and brokers, the report continued.

“As they come up with strategies for investor education as well as fund marketing and sales in China, managers need take note of the latest developments, and look for penetration points in digital networks,” Ken Yap, managing director, Asia, at Cerulli Associates, said. “Rather than being a temporary outcome of the coronavirus outbreak, the ‘digitalized human touch’ could have a long-term impact on the industry,” he added.