(Yicai Global) Sept. 17 -- The proportion of China’s wealth tied up in real estate is too high, while too little is invested in financial assets, according to a former head of the country’s securities regulator.
There is high demand for wealth management in China, but the structure of the wealth owned by people is unreasonable, Xiao Gang said in a speech at the China Asset Management Annual Conference today. Cash and deposits account for a relatively high proportion of financial assets, while stocks, bonds, funds, and insurance assets are under-represented, he noted.
In terms of the asset allocation of wealth management institutions, fixed income products and non-standard investments make up a large share, while equity products account for a very limited proportion, he said.
Long-term investors are the key to the capital market’s long-term stable development, Xiao noted. To build a market environment where funds are “willing to come and stay,” it is necessary to promote the capital market’s reform and opening up and adopt policies to guide capital investment into science and technology firms as well as small businesses.
China should also accelerate the transformation of the asset management industry, he said. Xiao believes that the distrust of market managers is an important reason for the general lack of funds in asset management institutions.
The principal of an asset management institution must be faithful to the purpose of the entrustment and the interests of the beneficiary, he said, adding that they should also boast the corresponding ability to perform their duties faithfully and diligently.
Xiao was the chairman of the China Securities Regulatory Commission from March 2013 to February 2016. He was succeeded by Liu Shiyu. The CSRC is now chaired by Yi Huiman.
Editor: Peter Thomas