Independent research group Matrix Services has conducted a survey of China's funds industry that calculates professionally managed assets now total $168 billion, a figure that could rise by a factor of 10 in seven years.
The biggest chunk comes from life insurance companies, accounting for $88 billion of assets, with pensions (including pillars one and two of the unified pension scheme and the National Social Security Fund) at $60 billion and the mutual funds business at $20 billion.
That compares to an estimated $85 billion in the 'grey' or unregulated funds business, and $225 billion of unregulated direct investment into the capital markets or overseas holders of government bonds, putting the total unregulated sector at $310 billion. Assets held by banks or other state-owned organizations are estimated at $585 billion.
Robert Agnew, Hong Kong-based managing director at Matrix, projects professionally managed assets will grow to $1.6 trillion by 2010, comprising of $360 billion of pensions assets, $750 billion of life insurance assets and $500 billion in mutual funds.
Although the grey funds market will also grow to $400 billion, that's only 25% of the size of the professional market, down from about half today. Direct investment is tipped to reach $395 billion, while state- and bank-owned assets will hit $1.25 trillion.
These estimates, derived from calculations about economic growth correlated with expected new investment instruments and pools of capital, are based on assumptions such as government bond issuance remains slightly above GDP, a cautious stock market recovery and steady dividend returns, as well as assumptions about life insurance premiums and pension returns.
Matrix carried out the survey on behalf of portfolio management software firm DST International.