May 27, 2024 • 28 mins
Investing veteran and ChinaAMC CEO Li Yimei is upbeat on China's prospects, and that optimism frames her views on a wide range of subjects ranging from Chinese equities to whether crypto ETFs will find traction with mainland investors. Li shares those insights with David Ingles, Chief Markets Editor for Asia-Pacific and host of The China Show, and Rebecca Sin, Head of Asia-Pacific ETF Research at Bloomberg Intelligence, in the second installment of our Tiger Money podcast.
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Speaker 1 (00:00):
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Speaker 2 (00:18):
Welcome to Tiger Money, a Bloomberg podcast about investing, money, funds,
and all things in between. From Crypto China maybe to
even Tigers. I'm David Inglass, non Pulitzer Price Award winning journalist,
hosted a China show and chief Markets editor from Bloomberg TV.
With me here is Rebecca Send, Bloomberg Intelligence Senior ETF analyst.
(00:39):
Will be unpacking all the current trends, the key mysteries
and major themes in this current market environment. If you
like what you hear, please do not forget to subscribe
to like and also to share.
Speaker 3 (00:52):
Thank you David. Today, we are so thrilled to have
Miss Email Lee, CEO of China AMC, the largest and
first ETF issuer in China. Miss Lee joined China AMC
in two thousand and one and has held numerous roles
including Head of Sales and Marketing and Senior Vice President
of International Business with over two hundred and sixty six
million in assets under management, over two hundred and fifty
(01:15):
three thousand institutional clients, and almost two hundred and twenty
million retail investors, who are so thrilled that you could
join us on our podcast today. What you may not
know is that miss Lee likes singing and calligraphy in
her spare time. So with that, welcome is Lee, and
thank you for joining Tiger Bunny.
Speaker 4 (01:33):
Well, thank you and so glad to be here today.
Speaker 2 (01:36):
It's quite a timely conversation to have given the market
environment we're in. It's been a challenging past several years
for investors in Chinese markets offshore and on shore. And
you know what, you're the perfect person to maybe give
us the sort of bird's eye view of what's really
going on. How would you describe market sentiment and market
(01:56):
conditions right now following what we just mentioned has been
a challenging period.
Speaker 4 (02:01):
Yeah, you're right, David. I think definitely in the past
several years, Chinese market has been quite painful to watch
and even to invest, And in my past twenty three
years of being in this industry, I think, well, we
also can feel the pain and we are also the
investors ourselves, right, so we definitely think the market has
(02:22):
not performing as it should be with a value driven
sentiment or principle. Well, this year, I think certainly it's
also a roller coaster for all the investors, and especially
in the beginning of the year, I think we all
have seen the market plummet into a very low point.
But I'm happy to say that we definitely see investors
(02:44):
sentiment coming back and now, I think, especially given all
the regulatory guidelines our the government have newly issued, and
also given the economies turning around in the first quarter,
So we definitely I think it's more confident going.
Speaker 2 (03:01):
That takes us then to what the next few months
likely looks like for this market, And obviously there are
many unknown still, but you mentioned one of the most
important pillars and foundations of this market is really what
happens with the economy. So against that backdrop of where
we think the economy might be over the next few months,
what's your outlook for both onshore and offshore market.
Speaker 4 (03:25):
Well, the economy side, I think people do have different
views and different theories because it lies on different expectations
of where you come from, where do you expect the
economy to be and how fast you want it to grow.
So from our point of view, definitely China accountry is
in the process of establishing a new line of development.
(03:46):
And I always tell this to our investors. Is never
easy for any company, business, state, country actually to find
a new development in business, a new curve. Certainly it's
going to be not easy, so we need to be patient.
And any sign that we have been seeing, especially in
high end manufacture, in our IV industry and in our semiconductors,
(04:12):
these are very positive signs that we are looking at
and could lead to the success of a new development
phase in China. So for us, we definitely think the
economy is going to be much better in the next
half year. In this year, so we are looking forward
to all the signals to be picked up bed market
(04:32):
and so that we really can see the promising in
several business lines in China.
Speaker 3 (04:38):
I think in terms of fun flows, we've definitely seen
that sentiment. So this year we've seen huge inflows into
ETFs in mainland China. China currently has roughly three hundred
and fifty million of assets under management, your rank second
after Japan. But our estimate is because of the phenomenal
growth we've seen across mainland China, we expect that you
(04:59):
may surpass Japan in terms of assets under management for ETFs.
In terms of fun inflow, we've seen roughly one hundred
and thirty billion in the past year, which is highest
amongst Asia Pacific. So as the largest etf issuer in
mainland China, having launched the first ETF in two thousand
and four, what do you think you did right and
anything you would have done differently? Are there any benefits
(05:20):
of being the largest etf issuer and what can you
do that your competitors can't.
Speaker 4 (05:26):
Well, that's a lot of really tough questions. I definitely
think being the largest one is not accidental because we
launched our first ETF in two thousand and four, and
I was very lucky and very proud to be part
of that process. It took us like three years actually
just to prepare for this launch, and it was also
(05:47):
very very hard time at the time. The market was
very very verrish at the time as well. So I
think this process we hit one trailing in ETF with
seventeen years of the element in China and the next
trilling we use three years so this is a long
waiting process. I think it really took perseverance, and you
(06:10):
need to believe in this kind of product and instruments.
What kind of valuing you create for institution investors, for
individual investors, for asset allocators. So I think China MC
we were maybe one or one of those very few
who really hang in there during the market, was you know,
(06:31):
incubated or educated the process. We put so much into
that strategy. So what we did rite is we had
this strong belief and we invest hugely into this process.
I think that's what we have been doing and we
will do in the future. As being one of the largest,
I wouldn't say we are dominant in this market right
(06:53):
now because we are still quite new, so it's kind
of early to say who will be the dominator in
this area. But I think ETF is very different in
the sense that it has its own ecological system. So
it's like grow a plant. To some point, this plant
becomes a tree and it has its own growth. It's
(07:13):
very beautiful and very magical. So in that sense, being
the longest and largest, we nurtured a lot of these
kind of trees in the forest so that it constructs
a very very healthy ecological system for every participants in
this market and in the products, and I think that's
something that we have, or we at least at this
(07:35):
point have a better edge.
Speaker 2 (07:37):
Yeah, I was going to ask something just cross my
mind as you were answering that how important is brand
value your name in Mainland China, most particularly within the
ETF market, because you've been around for years, and I'm
wondering whether that helps attract or do retail and institutional
investors gravitate towards the big names in mainland China.
Speaker 4 (07:59):
Well, I think it's more more that in the brand
rather than in the product. But in the beginning, everything
starts with the product, right, So our first one is
s SE fifty. We also have other companies Hassis three hundred,
which is the biggest, So I think in the beginning
everything is linked to the product. But with you grow
(08:20):
in a number of products, the ecosystem and the liquidity management,
and people start to understand this is not just about
one single product that's accidentally being successful. This is about
how you manage the whole process. And we have a
saying that we have to try our best put all
the efforts into the process. So that you think this
(08:41):
looks effortless, It's not really effortless. It's how you manage
to establish your systematic advantage and procedures in this area.
So I think the brand come in more and more
in this past several years than in the past, and
hoping going forward brand will play better role rather than
(09:02):
the product is dominant factor.
Speaker 2 (09:04):
So you talked about the brand and the hard work
that you and your management team put in place, and
I'm wondering how important is the brand and what other
things would you say are important in you being able
to defend your market position as one of the dominant players.
Speaker 4 (09:20):
I think for ETFs, everyone certainly have a sense of
whoever launched the first one in certain kind will have
a dominant player position. But we have been in the
past several years proved that even though we could be
second comer, we still can manage to succeed the first runner.
So that's how you leverage your experience, leverage your market position,
(09:44):
your brand, and you are trust with your investors actually
and service and your investors more than anything else to
become better etf issuer or service provider. So going forward,
I think one I always stress this point because ETF
is investing with index, so the quality of index and
(10:07):
what we are investing is the core and fundamental factor.
So as China m see, we are not just the
ETF issuer. We are actually a multi asset very comprehensive platform.
So we need to engage our active fundamental analysts to
create better index, to optimize the index along the way,
(10:29):
so people investing in this index can serve its purpose.
That's why I think it's always the most important to
look at the quality of the index and what you're
investing in. And secondly, I think servicing the investors are
key because there are so many ETFs right now, and
like legos, I always compare our ETFs as legos because
(10:50):
we build all the building blocks and also we need
to build out the shapes for our investors as well.
So if investors lack superheroes and you can create ironment,
if they like high reportter, you can create something different.
So how to customize our product and servicing process for
the neees of different investors also will be the key
(11:11):
in the future computation.
Speaker 3 (11:13):
I think that is a very good analogy of ETFs
and legos, and ultimately ETF is just a rapper that
can build anything. But as the largest ETF issuer in China,
where you serve over two hundred and fifty three thousand
institutional clients across central banks, sovereign wealth funds, not just
across Asia Pacific, but in Europe, North America and Latin
(11:34):
and almost two hundred and twenty million retail investors. One
thing that's interesting about China is that it has two
hundred million stock investors, seven hundred million mutual fund investors,
but only less than ten million ETF investors. And so
ETFs are still a very new concept in mainland China,
and a large portion of the assets are retail driven,
(11:54):
so seventy five percent of the markets attributed to retail.
As you guys grow, how do you bridge the get
to attract more foreign institutional money into China ETFs, whether
that's from mutual funds or ETFs.
Speaker 4 (12:06):
Yeah, that's I think very good question in China. Definitely,
I think the investors education is a long way to go.
And definitely it's not easy to really talk to people
about e t F, which is all in foreign letters. Right,
So we in China, because I have been in this
business for so long, and I said the hardest way
(12:29):
to sell products is the products with numbers and with
letters in it. So it's very different to get across
the ideas and what is really index investing and what
is really behind all these index But I think we
have gained tremendous growth in our investors in the past
two years, so retail wise, I think that will pick
(12:49):
up really fast. At the same time for QF investors
or international investors to invest in the ETFs. We also
have ce momentums in the past two years. Actually our
major investor from international side I think tripled, so the
investor really start also using ETF as a tool to
(13:10):
invest in China. And I think the way we want
to get message crossed is not just about the core index,
So what about the thematics, what about the industry ETFs
that are having so much attention from the retail and
other investors in China. So these are the market education
we need to do for our international investors. And now
(13:32):
we have seen very positive feedback because I think the
international investors structure has really broadening in the past just
QFEE and now I think because we have ETF connects
and a lot of investors can invest in Minian China's
ETF through Hong Kong, which will be much convenient for
them to get invested in. So that's part. I think
(13:55):
we'll also be very optimistic about the international investors participation
in future.
Speaker 2 (14:01):
Yeah, and I would imagine, you know, these multiple doors
that have opened in recent years for investors to come
in and come out, domestic investors to bring their money out,
and of course foreign money to bring their money in.
A lot of that has to do with what regulators
have done to open the market. And I'm curious from
someone who's in the industry, what have been the most
(14:22):
important regulatory milestones that you've seen in recent years? That's
number one and number two? What do you think the
priorities are for regulators right now to develop the industry further?
Speaker 4 (14:34):
Well, there are so many things I can say, but
if we narrow it to the ETF area, which we
are talking about today, I think in the past one
of the most important one I think is still the
ETF connect because it really opens doors for us, especially
with the limited quota in QDII. I think the connect
(14:55):
really gave us a great chance in diversification for our
asset and lying right. Certainly in the past the regulatory
agencies and the CSRC, they have been trying to really
foster the ETF growth. So I think the ETF we
have a fast pass almost in approval for products, which
(15:17):
really opened great possibilities for us to being the creator
of EDF, the creator of all the lego parts, so
that we have more things to play with going forward. Definitely,
we still hope that ETF could be the ultimate building blocks,
and now we really hope that we can introduce more
asset classes into ETFs. For example, we are looking forward
(15:40):
to the ETF of reds, the reeds products, and we
are looking forward to more possibilities of Hong Kong's products
through connect to get into million China so that people
really have access to internationalized asset allocation.
Speaker 1 (15:57):
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Speaker 3 (16:15):
So a fun fact for our audience is if you
get the translation of ETFs in Chinese, the exact translation
is exchange traded open end index security investment funds. So
it's very long as.
Speaker 2 (16:27):
That really rolls off the town, doesn't it.
Speaker 3 (16:29):
So to miss Lee's point, you know, index is a
very crucial part of the element. But let's shift gear
and talk about the Bitcoin in Ether ETF that you
guys launched in Hong Kong. Largest assets under management, very successful, large,
we've seen huge interests not just from clients in Asia
Pacific but also Europe in US. What do you anticipate
(16:50):
to be the take up for this product this year?
Speaker 4 (16:54):
Well, we are so excited about this opportunity and so
proud to be part of this process. And well, we
think that Hong Kong being able to launch the first
especially in kind creation of the Bitcoin ETF and the
Ether ETF really is a great milestone for Hong Kong
as the hub of international financial center going forward. Well,
(17:17):
I personally believe that diversification is the key for any
asset allocation and also wealth management, and there's so many
demands that right now to diversify to actually lower volatility
for both domestic and also international investors. So we have
great anticipation and also we think there will be really
(17:40):
high tide coming from asset allocations point going into the
Bitcoin and Ether ETFs. I have been getting so many
messages and text messages from my friend in midn in
China to say if they can invest personally and if
their companies, you know, asset allocation can go into Hong
Kong and actually to invest in the products. So we
(18:03):
are all very excited.
Speaker 2 (18:04):
That was actually I'm glad you brought that up, because
that was one of the first things that came to
mind when regulators here in Hong Kong started talking about
wanting to do this, and I was wondering to what
extent accessibility will become an issue or opportunity really for
mainined investors. But that's why I want to ask you too,
(18:25):
when you heard that regulators were looking to do this,
how quickly did you tell your team this is something
we need to do, this is a priority for us.
Speaker 4 (18:31):
I think in the heartbit, well, this is something I
have been trying to do for a long time. This
is not just about SFC in Hong Kong, and we
have been talking about building blocks like legos, right so,
I think at least five years ago we were talking
about in Menan, China's headquarters, if we can create some
kind of future piece because we cannot have in kind
(18:52):
in mill In China. So we were talking about if
there is a possibility of like our goal daf right.
So this has always been in our mind and when
we heard there could be a breakthrough in Hong Kong,
we could not be happier and more excited about this.
So I just tell our Hong Kong team, whatever you
need to do, we need to be on the first list.
Speaker 2 (19:16):
So what exactly is possible now? So can on shore
investors buy cryptos as you mentioned in kind for example?
And how does the listing here in Hong Kong, How
does that somewhat alleviate restrictions to buy crypto for example?
How does that work for international audience that wants to
understand what the dynamics are.
Speaker 4 (19:34):
Well, I think right now it's still in a very
early stage in this progress, and I don't think currently
instantly like million China investors can directly invest in the
Hong Kong issued ETFs in bitcoin, but definitely I do
think that opens doors for great accessibility and investability in
(19:54):
this kind of alternative products. Right and also because we
have this qdis game, so because in China MC we
also have our multi assets solution kind of products using
QDII as a tool. So I think in the beginning
there will be such attempts to actually to see if
(20:15):
that product will mix very well in our asset allocated poll. Right.
But going forward, I definitely see a chand in the
future because now we hear so many wealth managers saying
to the high networks that at least five percent of
your assets should go into bitcoin. Right. So I think
this is such a good differentiator in terms of volatility,
(20:39):
But I think it will take time because currently the
ETF connect is still only within the range of stock connect,
that's right, So it's gonna take several steps in the
regulatory progress to lead us to the end that if
we can invest in alternative assets, well not just limited
to bitcoins, but alternative assets as a whole.
Speaker 2 (21:01):
So that takes me then into what other things are
cooking in your kitchen? You have over one hundred products.
What are your priorities this year? What do you want
to see? What cool sematics you think are going to
be well received this in this market.
Speaker 4 (21:15):
Yeah, it's always fun to look at our product spectrum
because it's not just a product line, it's a whole
thing that it's like a spectrum. So it's always fun
to look at, like if we do enough in certain areas,
if we are more pinpoint in certain asset classes. But
now I think one of the priority we are looking
at is how to create an index that really can
(21:39):
reflect the new China, especially China's advantage in economy. So
that being said, I think we are currently not just
on our own, we also cooperate with the index company
in China to see if we can create something like
China version of SP five hundred, which not only have
the element of capitalization in seleucting different stocks, but also
(22:03):
have the fundamentals going into our process so that we
can pick the best in kind.
Speaker 2 (22:09):
That's a very good point you bring up. I mean
even every day in what we do. You know, we
do the China Show, we have our producers, we have
our whole news gathering team, and every day there's a
different index that does something else. Do you look at
the Shangan composite, you look at the Hanksing China Index.
Do you look at a fifty futures CSI two thousand? Sometimes?
Is it the chinaxt? Is it hang Saying Tech Index?
(22:31):
So I'm wondering, and I know you guys are still
contemplating and experimenting what an index might actually look like.
Just give us a sense what you suspect that eventually
looks like. Is that purely onshore stocks? Is that an
index of five hundred names for example? What do you
think that might look like in the future.
Speaker 4 (22:52):
For me personally, And this is really not the official version,
but for me definitely, I think it should at least
combine in words, in the Hong Kong's stock market. And
it really goes back to the fundamental question why people
invest in a broad index, right, so you invest in
SP five hundred to really reflect the whole us in
(23:15):
the same thing that you are. If you want to
buy us economy, you go to SP five hundred. So
that's your ultimate solution. Right when we look at China
and what represents China's economy. Frankly speaking, in the past
ten years, the best companies in China, most of them
are not listed in Asia. So I do think we
(23:35):
really need to incorporate what is the best in China.
When you invest in China, you want to invest the
best companies in China. And then what's the criteria to
combine value and growth because it's not going to be
just value or just growth. I think this is hard
and it's not probably going to be successful for the
first attempt, but we will keep digging and keep using
(23:59):
our active funda mental analysis to try to picture what
we think would be the best way to show China
to the whole world.
Speaker 2 (24:08):
Yeah, I was just having a look. The S and
P five hundred took several decades. Really, right, it's been
a nineteen twenty eight I could I'm likely a mistaken there,
but it's been a long time. Well, we have a
little bit of time left, so we put together some
fun questions for you. I think Rebecca is itching to
ask some of these things. Rebecca, what did you take things?
Speaker 3 (24:25):
Okay? Best advice someone gave you.
Speaker 4 (24:28):
Best advice someone gave me. I'm a very open person,
so I pick up advices all the time. But well,
being a leader, it's sometimes you tend to get complacent
or people saying nice things about you all the time, right,
because you're you a CEO of the company. So the
(24:49):
advice I get from a husband actually is always to
be humble and to know that you don't know, so
that you don't become this know it all boss instead
of just being part of the whole team's great wisdom.
Speaker 2 (25:05):
I want to follow up on that as well, because
your CEO, the people you mostly interact with, I would
imagine or in your company as well, And I'm wondering,
can you tell that sometimes people are putting on an
act showing, you know, putting their best foot forward to
show you, you know, are you having to read between
the lines and what they're saying and what they're actually
(25:26):
trying to tell you?
Speaker 4 (25:28):
Well, this is the good thing about being in the
same company forever, right, so you know everyone from when
they are really young, and then it's like classmates growing
up and you really know the person. And also in
China MC, we really have the luxury of having people
working together for more than ten or twenty years. So
I think the trust we have among each other, I
(25:51):
think is more than anything. We always think about what
time can leave a company. You have a longer time
of a company, is it necessarily better? Not necessarily, but
the trust in your group, in your colleagues, that's something
takes really a long time to build, and that is
something time leaves us with a lot of treasures. So
(26:13):
I think maybe there will be But knowing your business
and knowing everyone in the company for so long, I
think we cut to the shortest traits instead of really
everyone putting up the show every day. So politics for
everyone saying about office politics really is very minimum in China. AMC.
Speaker 2 (26:34):
Yeah, I think the Mandarin phrase for those route trends
around or around the bushes. What's the hardest part of
your job?
Speaker 4 (26:42):
The hardest part is always the anxiety of not sure
if we have seen the right path down the road.
Every day. I think I'm engaged in this anxiety to
look forward and to know if we have positioned ourselves
of the best serve of clients, especially with this AI
(27:03):
generation and also this new development in technology, and are
we best equipped to go into another very different and
revolutionary time era. So this is I think the hardest
job of being the CEO, because you are the ultimate
decision maker in this process.
Speaker 2 (27:23):
I guess a silver lining, there's no one really does,
so no one is better off with the information. Final
question for you, what's the best investment that you've ever
made in your life, whether that involves money or not.
Speaker 4 (27:36):
Well, the best investments is in myself. I think the
investment is the hard work, and I don't believe anything
other than hardworking. You cannot choose to be smarter or prettier.
But the one thing you can control is how much
you try and how much you can persevere in the
(27:58):
long run. I think that is the best investment I have.
Speaker 2 (28:03):
Fantastic there we go to start it off as an
ETF podcast. I think we just bordered on the philosophical there.
Speaker 3 (28:09):
Thank you so much for joining us today.
Speaker 4 (28:11):
Emi, Thank you so much.
Speaker 3 (28:13):
If you like what you hear, don't forget to subscribe
and share Tiger Money, your podcast about investing financial markets
and ETF. This podcast was produced by Clara Chan. Until
next time. You can find David and myself inside the
Bloomberg terminal or on LinkedIn.
This podcast is brought to you by HKX, Asia's ETF marketplace.
Well you'll find a gateway to liquidity and a diverse
selection of opportunities across asset classes, sectors and themes in
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Speaker 2 (00:18):
Welcome to Tiger Money, a Bloomberg podcast about investing, money, funds,
and all things in between. From Crypto China maybe to
even Tigers. I'm David Inglass, non Pulitzer Price Award winning journalist,
hosted a China show and chief Markets editor from Bloomberg TV.
With me here is Rebecca Send, Bloomberg Intelligence Senior ETF analyst.
(00:39):
Will be unpacking all the current trends, the key mysteries
and major themes in this current market environment. If you
like what you hear, please do not forget to subscribe
to like and also to share.
Speaker 3 (00:52):
Thank you David. Today, we are so thrilled to have
Miss Email Lee, CEO of China AMC, the largest and
first ETF issuer in China. Miss Lee joined China AMC
in two thousand and one and has held numerous roles
including Head of Sales and Marketing and Senior Vice President
of International Business with over two hundred and sixty six
million in assets under management, over two hundred and fifty
(01:15):
three thousand institutional clients, and almost two hundred and twenty
million retail investors, who are so thrilled that you could
join us on our podcast today. What you may not
know is that miss Lee likes singing and calligraphy in
her spare time. So with that, welcome is Lee, and
thank you for joining Tiger Bunny.
Speaker 4 (01:33):
Well, thank you and so glad to be here today.
Speaker 2 (01:36):
It's quite a timely conversation to have given the market
environment we're in. It's been a challenging past several years
for investors in Chinese markets offshore and on shore. And
you know what, you're the perfect person to maybe give
us the sort of bird's eye view of what's really
going on. How would you describe market sentiment and market
(01:56):
conditions right now following what we just mentioned has been
a challenging period.
Speaker 4 (02:01):
Yeah, you're right, David. I think definitely in the past
several years, Chinese market has been quite painful to watch
and even to invest, And in my past twenty three
years of being in this industry, I think, well, we
also can feel the pain and we are also the
investors ourselves, right, so we definitely think the market has
(02:22):
not performing as it should be with a value driven
sentiment or principle. Well, this year, I think certainly it's
also a roller coaster for all the investors, and especially
in the beginning of the year, I think we all
have seen the market plummet into a very low point.
But I'm happy to say that we definitely see investors
(02:44):
sentiment coming back and now, I think, especially given all
the regulatory guidelines our the government have newly issued, and
also given the economies turning around in the first quarter,
So we definitely I think it's more confident going.
Speaker 2 (03:01):
That takes us then to what the next few months
likely looks like for this market, And obviously there are
many unknown still, but you mentioned one of the most
important pillars and foundations of this market is really what
happens with the economy. So against that backdrop of where
we think the economy might be over the next few months,
what's your outlook for both onshore and offshore market.
Speaker 4 (03:25):
Well, the economy side, I think people do have different
views and different theories because it lies on different expectations
of where you come from, where do you expect the
economy to be and how fast you want it to grow.
So from our point of view, definitely China accountry is
in the process of establishing a new line of development.
(03:46):
And I always tell this to our investors. Is never
easy for any company, business, state, country actually to find
a new development in business, a new curve. Certainly it's
going to be not easy, so we need to be patient.
And any sign that we have been seeing, especially in
high end manufacture, in our IV industry and in our semiconductors,
(04:12):
these are very positive signs that we are looking at
and could lead to the success of a new development
phase in China. So for us, we definitely think the
economy is going to be much better in the next
half year. In this year, so we are looking forward
to all the signals to be picked up bed market
(04:32):
and so that we really can see the promising in
several business lines in China.
Speaker 3 (04:38):
I think in terms of fun flows, we've definitely seen
that sentiment. So this year we've seen huge inflows into
ETFs in mainland China. China currently has roughly three hundred
and fifty million of assets under management, your rank second
after Japan. But our estimate is because of the phenomenal
growth we've seen across mainland China, we expect that you
(04:59):
may surpass Japan in terms of assets under management for ETFs.
In terms of fun inflow, we've seen roughly one hundred
and thirty billion in the past year, which is highest
amongst Asia Pacific. So as the largest etf issuer in
mainland China, having launched the first ETF in two thousand
and four, what do you think you did right and
anything you would have done differently? Are there any benefits
(05:20):
of being the largest etf issuer and what can you
do that your competitors can't.
Speaker 4 (05:26):
Well, that's a lot of really tough questions. I definitely
think being the largest one is not accidental because we
launched our first ETF in two thousand and four, and
I was very lucky and very proud to be part
of that process. It took us like three years actually
just to prepare for this launch, and it was also
(05:47):
very very hard time at the time. The market was
very very verrish at the time as well. So I
think this process we hit one trailing in ETF with
seventeen years of the element in China and the next
trilling we use three years so this is a long
waiting process. I think it really took perseverance, and you
(06:10):
need to believe in this kind of product and instruments.
What kind of valuing you create for institution investors, for
individual investors, for asset allocators. So I think China MC
we were maybe one or one of those very few
who really hang in there during the market, was you know,
(06:31):
incubated or educated the process. We put so much into
that strategy. So what we did rite is we had
this strong belief and we invest hugely into this process.
I think that's what we have been doing and we
will do in the future. As being one of the largest,
I wouldn't say we are dominant in this market right
(06:53):
now because we are still quite new, so it's kind
of early to say who will be the dominator in
this area. But I think ETF is very different in
the sense that it has its own ecological system. So
it's like grow a plant. To some point, this plant
becomes a tree and it has its own growth. It's
(07:13):
very beautiful and very magical. So in that sense, being
the longest and largest, we nurtured a lot of these
kind of trees in the forest so that it constructs
a very very healthy ecological system for every participants in
this market and in the products, and I think that's
something that we have, or we at least at this
(07:35):
point have a better edge.
Speaker 2 (07:37):
Yeah, I was going to ask something just cross my
mind as you were answering that how important is brand
value your name in Mainland China, most particularly within the
ETF market, because you've been around for years, and I'm
wondering whether that helps attract or do retail and institutional
investors gravitate towards the big names in mainland China.
Speaker 4 (07:59):
Well, I think it's more more that in the brand
rather than in the product. But in the beginning, everything
starts with the product, right, So our first one is
s SE fifty. We also have other companies Hassis three hundred,
which is the biggest, So I think in the beginning
everything is linked to the product. But with you grow
(08:20):
in a number of products, the ecosystem and the liquidity management,
and people start to understand this is not just about
one single product that's accidentally being successful. This is about
how you manage the whole process. And we have a
saying that we have to try our best put all
the efforts into the process. So that you think this
(08:41):
looks effortless, It's not really effortless. It's how you manage
to establish your systematic advantage and procedures in this area.
So I think the brand come in more and more
in this past several years than in the past, and
hoping going forward brand will play better role rather than
(09:02):
the product is dominant factor.
Speaker 2 (09:04):
So you talked about the brand and the hard work
that you and your management team put in place, and
I'm wondering how important is the brand and what other
things would you say are important in you being able
to defend your market position as one of the dominant players.
Speaker 4 (09:20):
I think for ETFs, everyone certainly have a sense of
whoever launched the first one in certain kind will have
a dominant player position. But we have been in the
past several years proved that even though we could be
second comer, we still can manage to succeed the first runner.
So that's how you leverage your experience, leverage your market position,
(09:44):
your brand, and you are trust with your investors actually
and service and your investors more than anything else to
become better etf issuer or service provider. So going forward,
I think one I always stress this point because ETF
is investing with index, so the quality of index and
(10:07):
what we are investing is the core and fundamental factor.
So as China m see, we are not just the
ETF issuer. We are actually a multi asset very comprehensive platform.
So we need to engage our active fundamental analysts to
create better index, to optimize the index along the way,
(10:29):
so people investing in this index can serve its purpose.
That's why I think it's always the most important to
look at the quality of the index and what you're
investing in. And secondly, I think servicing the investors are
key because there are so many ETFs right now, and
like legos, I always compare our ETFs as legos because
(10:50):
we build all the building blocks and also we need
to build out the shapes for our investors as well.
So if investors lack superheroes and you can create ironment,
if they like high reportter, you can create something different.
So how to customize our product and servicing process for
the neees of different investors also will be the key
(11:11):
in the future computation.
Speaker 3 (11:13):
I think that is a very good analogy of ETFs
and legos, and ultimately ETF is just a rapper that
can build anything. But as the largest ETF issuer in China,
where you serve over two hundred and fifty three thousand
institutional clients across central banks, sovereign wealth funds, not just
across Asia Pacific, but in Europe, North America and Latin
(11:34):
and almost two hundred and twenty million retail investors. One
thing that's interesting about China is that it has two
hundred million stock investors, seven hundred million mutual fund investors,
but only less than ten million ETF investors. And so
ETFs are still a very new concept in mainland China,
and a large portion of the assets are retail driven,
(11:54):
so seventy five percent of the markets attributed to retail.
As you guys grow, how do you bridge the get
to attract more foreign institutional money into China ETFs, whether
that's from mutual funds or ETFs.
Speaker 4 (12:06):
Yeah, that's I think very good question in China. Definitely,
I think the investors education is a long way to go.
And definitely it's not easy to really talk to people
about e t F, which is all in foreign letters. Right,
So we in China, because I have been in this
business for so long, and I said the hardest way
(12:29):
to sell products is the products with numbers and with
letters in it. So it's very different to get across
the ideas and what is really index investing and what
is really behind all these index But I think we
have gained tremendous growth in our investors in the past
two years, so retail wise, I think that will pick
(12:49):
up really fast. At the same time for QF investors
or international investors to invest in the ETFs. We also
have ce momentums in the past two years. Actually our
major investor from international side I think tripled, so the
investor really start also using ETF as a tool to
(13:10):
invest in China. And I think the way we want
to get message crossed is not just about the core index,
So what about the thematics, what about the industry ETFs
that are having so much attention from the retail and
other investors in China. So these are the market education
we need to do for our international investors. And now
(13:32):
we have seen very positive feedback because I think the
international investors structure has really broadening in the past just
QFEE and now I think because we have ETF connects
and a lot of investors can invest in Minian China's
ETF through Hong Kong, which will be much convenient for
them to get invested in. So that's part. I think
(13:55):
we'll also be very optimistic about the international investors participation
in future.
Speaker 2 (14:01):
Yeah, and I would imagine, you know, these multiple doors
that have opened in recent years for investors to come
in and come out, domestic investors to bring their money out,
and of course foreign money to bring their money in.
A lot of that has to do with what regulators
have done to open the market. And I'm curious from
someone who's in the industry, what have been the most
(14:22):
important regulatory milestones that you've seen in recent years? That's
number one and number two? What do you think the
priorities are for regulators right now to develop the industry further?
Speaker 4 (14:34):
Well, there are so many things I can say, but
if we narrow it to the ETF area, which we
are talking about today, I think in the past one
of the most important one I think is still the
ETF connect because it really opens doors for us, especially
with the limited quota in QDII. I think the connect
(14:55):
really gave us a great chance in diversification for our
asset and lying right. Certainly in the past the regulatory
agencies and the CSRC, they have been trying to really
foster the ETF growth. So I think the ETF we
have a fast pass almost in approval for products, which
(15:17):
really opened great possibilities for us to being the creator
of EDF, the creator of all the lego parts, so
that we have more things to play with going forward. Definitely,
we still hope that ETF could be the ultimate building blocks,
and now we really hope that we can introduce more
asset classes into ETFs. For example, we are looking forward
(15:40):
to the ETF of reds, the reeds products, and we
are looking forward to more possibilities of Hong Kong's products
through connect to get into million China so that people
really have access to internationalized asset allocation.
Speaker 1 (15:57):
This podcast is brought to you by HKU Asia's ETF Marketplace,
where you can get exposure to themes ranging from AI
to virtual assets, small cap to large cap Greater China
to global search HKX to learn more.
Speaker 3 (16:15):
So a fun fact for our audience is if you
get the translation of ETFs in Chinese, the exact translation
is exchange traded open end index security investment funds. So
it's very long as.
Speaker 2 (16:27):
That really rolls off the town, doesn't it.
Speaker 3 (16:29):
So to miss Lee's point, you know, index is a
very crucial part of the element. But let's shift gear
and talk about the Bitcoin in Ether ETF that you
guys launched in Hong Kong. Largest assets under management, very successful, large,
we've seen huge interests not just from clients in Asia
Pacific but also Europe in US. What do you anticipate
(16:50):
to be the take up for this product this year?
Speaker 4 (16:54):
Well, we are so excited about this opportunity and so
proud to be part of this process. And well, we
think that Hong Kong being able to launch the first
especially in kind creation of the Bitcoin ETF and the
Ether ETF really is a great milestone for Hong Kong
as the hub of international financial center going forward. Well,
(17:17):
I personally believe that diversification is the key for any
asset allocation and also wealth management, and there's so many
demands that right now to diversify to actually lower volatility
for both domestic and also international investors. So we have
great anticipation and also we think there will be really
(17:40):
high tide coming from asset allocations point going into the
Bitcoin and Ether ETFs. I have been getting so many
messages and text messages from my friend in midn in
China to say if they can invest personally and if
their companies, you know, asset allocation can go into Hong
Kong and actually to invest in the products. So we
(18:03):
are all very excited.
Speaker 2 (18:04):
That was actually I'm glad you brought that up, because
that was one of the first things that came to
mind when regulators here in Hong Kong started talking about
wanting to do this, and I was wondering to what
extent accessibility will become an issue or opportunity really for
mainined investors. But that's why I want to ask you too,
(18:25):
when you heard that regulators were looking to do this,
how quickly did you tell your team this is something
we need to do, this is a priority for us.
Speaker 4 (18:31):
I think in the heartbit, well, this is something I
have been trying to do for a long time. This
is not just about SFC in Hong Kong, and we
have been talking about building blocks like legos, right so,
I think at least five years ago we were talking
about in Menan, China's headquarters, if we can create some
kind of future piece because we cannot have in kind
(18:52):
in mill In China. So we were talking about if
there is a possibility of like our goal daf right.
So this has always been in our mind and when
we heard there could be a breakthrough in Hong Kong,
we could not be happier and more excited about this.
So I just tell our Hong Kong team, whatever you
need to do, we need to be on the first list.
Speaker 2 (19:16):
So what exactly is possible now? So can on shore
investors buy cryptos as you mentioned in kind for example?
And how does the listing here in Hong Kong, How
does that somewhat alleviate restrictions to buy crypto for example?
How does that work for international audience that wants to
understand what the dynamics are.
Speaker 4 (19:34):
Well, I think right now it's still in a very
early stage in this progress, and I don't think currently
instantly like million China investors can directly invest in the
Hong Kong issued ETFs in bitcoin, but definitely I do
think that opens doors for great accessibility and investability in
(19:54):
this kind of alternative products. Right and also because we
have this qdis game, so because in China MC we
also have our multi assets solution kind of products using
QDII as a tool. So I think in the beginning
there will be such attempts to actually to see if
(20:15):
that product will mix very well in our asset allocated poll. Right.
But going forward, I definitely see a chand in the
future because now we hear so many wealth managers saying
to the high networks that at least five percent of
your assets should go into bitcoin. Right. So I think
this is such a good differentiator in terms of volatility,
(20:39):
But I think it will take time because currently the
ETF connect is still only within the range of stock connect,
that's right, So it's gonna take several steps in the
regulatory progress to lead us to the end that if
we can invest in alternative assets, well not just limited
to bitcoins, but alternative assets as a whole.
Speaker 2 (21:01):
So that takes me then into what other things are
cooking in your kitchen? You have over one hundred products.
What are your priorities this year? What do you want
to see? What cool sematics you think are going to
be well received this in this market.
Speaker 4 (21:15):
Yeah, it's always fun to look at our product spectrum
because it's not just a product line, it's a whole
thing that it's like a spectrum. So it's always fun
to look at, like if we do enough in certain areas,
if we are more pinpoint in certain asset classes. But
now I think one of the priority we are looking
at is how to create an index that really can
(21:39):
reflect the new China, especially China's advantage in economy. So
that being said, I think we are currently not just
on our own, we also cooperate with the index company
in China to see if we can create something like
China version of SP five hundred, which not only have
the element of capitalization in seleucting different stocks, but also
(22:03):
have the fundamentals going into our process so that we
can pick the best in kind.
Speaker 2 (22:09):
That's a very good point you bring up. I mean
even every day in what we do. You know, we
do the China Show, we have our producers, we have
our whole news gathering team, and every day there's a
different index that does something else. Do you look at
the Shangan composite, you look at the Hanksing China Index.
Do you look at a fifty futures CSI two thousand? Sometimes?
Is it the chinaxt? Is it hang Saying Tech Index?
(22:31):
So I'm wondering, and I know you guys are still
contemplating and experimenting what an index might actually look like.
Just give us a sense what you suspect that eventually
looks like. Is that purely onshore stocks? Is that an
index of five hundred names for example? What do you
think that might look like in the future.
Speaker 4 (22:52):
For me personally, And this is really not the official version,
but for me definitely, I think it should at least
combine in words, in the Hong Kong's stock market. And
it really goes back to the fundamental question why people
invest in a broad index, right, so you invest in
SP five hundred to really reflect the whole us in
(23:15):
the same thing that you are. If you want to
buy us economy, you go to SP five hundred. So
that's your ultimate solution. Right when we look at China
and what represents China's economy. Frankly speaking, in the past
ten years, the best companies in China, most of them
are not listed in Asia. So I do think we
(23:35):
really need to incorporate what is the best in China.
When you invest in China, you want to invest the
best companies in China. And then what's the criteria to
combine value and growth because it's not going to be
just value or just growth. I think this is hard
and it's not probably going to be successful for the
first attempt, but we will keep digging and keep using
(23:59):
our active funda mental analysis to try to picture what
we think would be the best way to show China
to the whole world.
Speaker 2 (24:08):
Yeah, I was just having a look. The S and
P five hundred took several decades. Really, right, it's been
a nineteen twenty eight I could I'm likely a mistaken there,
but it's been a long time. Well, we have a
little bit of time left, so we put together some
fun questions for you. I think Rebecca is itching to
ask some of these things. Rebecca, what did you take things?
Speaker 3 (24:25):
Okay? Best advice someone gave you.
Speaker 4 (24:28):
Best advice someone gave me. I'm a very open person,
so I pick up advices all the time. But well,
being a leader, it's sometimes you tend to get complacent
or people saying nice things about you all the time, right,
because you're you a CEO of the company. So the
(24:49):
advice I get from a husband actually is always to
be humble and to know that you don't know, so
that you don't become this know it all boss instead
of just being part of the whole team's great wisdom.
Speaker 2 (25:05):
I want to follow up on that as well, because
your CEO, the people you mostly interact with, I would
imagine or in your company as well, And I'm wondering,
can you tell that sometimes people are putting on an
act showing, you know, putting their best foot forward to
show you, you know, are you having to read between
the lines and what they're saying and what they're actually
(25:26):
trying to tell you?
Speaker 4 (25:28):
Well, this is the good thing about being in the
same company forever, right, so you know everyone from when
they are really young, and then it's like classmates growing
up and you really know the person. And also in
China MC, we really have the luxury of having people
working together for more than ten or twenty years. So
I think the trust we have among each other, I
(25:51):
think is more than anything. We always think about what
time can leave a company. You have a longer time
of a company, is it necessarily better? Not necessarily, but
the trust in your group, in your colleagues, that's something
takes really a long time to build, and that is
something time leaves us with a lot of treasures. So
(26:13):
I think maybe there will be But knowing your business
and knowing everyone in the company for so long, I
think we cut to the shortest traits instead of really
everyone putting up the show every day. So politics for
everyone saying about office politics really is very minimum in China. AMC.
Speaker 2 (26:34):
Yeah, I think the Mandarin phrase for those route trends
around or around the bushes. What's the hardest part of
your job?
Speaker 4 (26:42):
The hardest part is always the anxiety of not sure
if we have seen the right path down the road.
Every day. I think I'm engaged in this anxiety to
look forward and to know if we have positioned ourselves
of the best serve of clients, especially with this AI
(27:03):
generation and also this new development in technology, and are
we best equipped to go into another very different and
revolutionary time era. So this is I think the hardest
job of being the CEO, because you are the ultimate
decision maker in this process.
Speaker 2 (27:23):
I guess a silver lining, there's no one really does,
so no one is better off with the information. Final
question for you, what's the best investment that you've ever
made in your life, whether that involves money or not.
Speaker 4 (27:36):
Well, the best investments is in myself. I think the
investment is the hard work, and I don't believe anything
other than hardworking. You cannot choose to be smarter or prettier.
But the one thing you can control is how much
you try and how much you can persevere in the
(27:58):
long run. I think that is the best investment I have.
Speaker 2 (28:03):
Fantastic there we go to start it off as an
ETF podcast. I think we just bordered on the philosophical there.
Speaker 3 (28:09):
Thank you so much for joining us today.
Speaker 4 (28:11):
Emi, Thank you so much.
Speaker 3 (28:13):
If you like what you hear, don't forget to subscribe
and share Tiger Money, your podcast about investing financial markets
and ETF. This podcast was produced by Clara Chan. Until
next time. You can find David and myself inside the
Bloomberg terminal or on LinkedIn.
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