Neuberger Berman Asia-Pacific president Liu Song: China's capital market off...

by Ji Yao

Amid the complex international backdrop, China's capital market continues to advance high-level opening-up. The Third Plenary Session of the 20th CPC Central Committee introduced top-level design and development requirements for financial work. Among these, the need for an orderly expansion of China's capital market openness was emphasized, along with the acceleration of Shanghai’s transformation into an international financial center.

Following the central government’s guidance, Shanghai passed new regulations aimed at promoting its status as an international financial center. These regulations focus on expanding high-level financial openness, establishing a global asset management center, and deepening pilot programs like QFLP and QDLP. Measures such as exploring cross-border financial data management were also introduced.

Since China’s first free trade zone was established in Shanghai, the city has made significant strides toward becoming an international financial hub. Despite a constantly changing global economy, foreign institutions remain optimistic about China’s long-term development potential and are accelerating their presence in the country.

Jiemian News spoke with Liu Song, President of Neuberger Berman Asia-Pacific, who highlighted the rapid internationalization of China’s stock market. Liu noted that the inclusion of A-shares in international indices like MSCI will increase foreign capital inflows, further boosting market liquidity and efficiency.

Founded in 1939 and headquartered in New York, Neuberger Berman operates in 39 cities worldwide. As of June 30, 2024, the company managed over $480 billion (3.48 trillion yuan) in assets.

Jiemian News: When did Neuberger Berman enter China, and how has the company developed here?

Liu: Neuberger Berman entered the Chinese market in 2008. In 2018, we became a QDLP business pilot institution with support from the Shanghai Financial Regulatory Bureau, establishing an overseas investment fund management subsidiary.

On April 1, 2020, Neuberger Berman was among the first foreign asset management companies to apply for a wholly foreign-owned public fund management company license to concurrently conduct private asset management businesses. In September 2021, the CSRC approved our establishment of a public fund company, and after completing an on-site inspection in June 2022, Neuberger Berman Fund Management (China) Co., Ltd. was approved to open in November 2022.

Jiemian News: With the expanding openness of China's financial market, how do you foresee changes for the industry, and what opportunities and challenges do foreign institutions face?

Liu: China's achievements over the past 40 years are inseparable from reform and opening-up. Advancing high-level openness and establishing a new open economic system will enable China to better leverage both domestic and international markets and resources to promote high-quality growth. At the same time, China’s economic development will benefit the world.

Shanghai has always been at the forefront of capital market openness and serves as the hub for China’s financial industry opening to the world. It’s a natural gathering point for foreign financial institutions.

Global economies are facing slowing growth, and China is no exception. Pressures include weakened domestic and international demand, challenges in industrial upgrading, and uncertainties in the international trade environment, which may impact the stock market.

To address these challenges, the Chinese government has implemented fiscal stimulus and monetary easing policies, which may influence capital market performance.

China’s economy is transitioning from being export- and investment-driven to relying more on domestic demand and consumption. While this shift may create short-term market uncertainty, it supports more stable and sustainable growth in the long term.

The stock market, historically dominated by retail investors, is seeing a growing presence of institutional investors. These investors contribute to market stability and maturity with their professional, long-term perspectives. However, foreign institutions still face challenges such as limited local recognition due to their relatively short operating history.

Jiemian News: As China’s financial market continues to open up, what new opportunities and challenges do foreign asset management institutions face?

Liu: China’s capital market is further opening, including the relaxation or removal of foreign ownership restrictions in securities and asset management. This provides more room for foreign institutions. With the accelerated internationalization of China’s stock market and the inclusion of A-shares in global indices like MSCI, foreign capital inflows are expected to increase, improving market liquidity and efficiency.

Despite recent downward pressures, China’s strong economic fundamentals, optimized market structure, and supportive policies create significant opportunities for asset management firms. Currently, China’s capital market may be in a value depression, offering attractive long-term opportunities for visionary investors.

Jiemian News: How should Shanghai leverage its advantages in financial markets and institutions to attract more international investors?

Liu: Shanghai, as China’s economic center and an international financial hub, has consistently attracted international investors. With strong policy support and a conducive business environment, the city holds clear advantages. Moving forward, enhancing international cooperation, advancing green finance, and promoting cross-border investment can further attract investors and bolster the maturity and internationalization of China’s financial markets.

Jiemian News: Both QDLP and public offerings are growing steadily in China. How will Neuberger Berman expand and strengthen its position?

Liu: As China’s capital market continues to open and internationalize, foreign public fund companies are steadily expanding their market share. By leveraging global investment experience and brand advantages, they are enhancing their influence. Over time, foreign public funds will introduce more products to meet diverse investor needs, and their strategies and risk management expertise will gain broader recognition.

Neuberger Berman remains committed to sustainable investment principles and leveraging our global strengths. With our professional team, we aim to enhance investment research and product innovation to provide high-quality asset management services tailored to our clients' needs.