Zhang Xuyang, Chief Business Director of Everbright Bank and Chairman of Everbright Wealth Management Sina Finance News On January 11, the first quarter summit of the 2020 Global Wealth Management Forum was held in Beijing. Everbright Bank Zhang Xuyang, chief business director and chairman of Everbright Wealth Management, attended the forum and made a speech.
Zhang Xuyang said that in the next decade, both the world and China will face many uncertainties. The only certainty is technological progress and the digital world. He believes that the industrial changes brought about by technological progress deserve attention. He hopes that the next step will focus on the establishment of personal pension accounts and better integrate the asset management and wealth management industries. At the same time, he proposed to increase the deduction amount of pension tax extension and expand the scope of asset management institutions of pension and enterprise annuity.
The following is the transcript of the speech:
Zhang Xuyang: Thanks for the invitation of the meeting. Indeed, bank asset management and bank financing are new recruits in our pension market. Many qualifications are still being sought. However, I am here today, and I also want to share with you some views and strategies of bank financing on long-term investment.
First of all, let me share with you that with the increase of life expectancy of our people, we have entered a new era of longevity. Goodnaff, who won the Nobel Prize in Chemistry last year, was 97 years old when he won the prize. Askin, the winner of the 2018 Nobel Prize in Physics, was 96 years old when he won the prize. The entire future asset management industry faces two "90" figures. First, life expectancy, especially in developed countries, including many large cities in China, is more than 90 years old. Everyone's investment planning and pension financing ideas will change greatly. Second, the post-90s, or even the post-00s, become the creators of social wealth and the determiners of wealth patterns.
At the same time, we will also see that China's aging society is accelerating, and the proportion and quantity of the elderly population are rising. Because the population structure brings about the overall development of pension investment, which is a data from the United States. It can be seen that the post-90s "baby boomers" have entered the wealth creation stage, including the launch of 401K, which has accelerated the development of public funds in the United States. In China, the first round of baby boom in the 1960s did not bring about the rapid development of the capital market, but this round of baby boom in the post-80s brought about the continuous increase of our demand for wealth management. With the support of some new policies, both the development of public funds and the development of bank financing have become an important allocation direction for Chinese investors.
Comparison between China and the United States. The second and third pillars are seriously underdeveloped. On the one hand, there is a big gap between China and the United States in terms of pension reserves. The development of the second and third pillars lags far behind that of the United States. China's per capita pension reserve is only about 1% of that of the United States.
Against this background, we believe that on the one hand, the management of pensions and the demand for long-term investment are increasing. On the other hand, on the investment side, because of the low interest rate environment, the entire product design for investors faces great challenges and difficulties.
In this context, the investment of major pension institutions in the world is constantly increasing the proportion of equity and gradually reducing the proportion of fixed income investment. The proportion of fixed income assets allocated by the United States and Canada's pensions has increased from 86% in 2001 to 19% in 2018. The allocation ratio of pension stocks in Norway rose from 40.5% in 1998 to 66.3% in 2018, which is a change in Europe, the United States and North America.
Japan's pension and fixed income allocation ratio is constantly approaching the statutory lower limit. It will also be a trend in China in the future, but for China, because the volatility of Chinese stocks is relatively high, we hope that we may increase the proportion of equity investment in the form of FOF and MOM, including structured products, so as to reduce the possible volatility. Second, the proportion of other investments will continue to increase. Third, with the arrival of digital business, the whole trend of investment management will also change from traditional assets to traditional alternative assets to possible digital alternative assets in the future.
In the next decade, both the world and China will face many uncertainties. The only certainty is the so-called technological progress and digital world. The proportion of equity assets has increased so that we investors can share the dividends here.
Several aspects can be grasped.
First, technological progress brings about changes in the industry. Many traditional industries are asset heavy. With the development of AI and 5G, many new industries are emerging. For example, the sensor industry behind artificial intelligence and the machine controller industry behind precision manufacturing, so we hope that both secondary market investment and equity equity investment can seize the emergence of emerging industries.
The upgrading of new consumer brands brought by the digital world. Many brands in the past, no matter Yunnan Baiyao , Coca Cola, are all produced in the physical world. With the development of e-commerce, I believe that Three squirrels New brands will emerge in many times in the future.
We hope to seize the so-called new value chain and new jumping nodes brought by AI and digitalization, and seize the new development path of 2B and 2C.
Because the demand for old-age care is growing, the demand of the elderly lies in health, and lies in the so-called investment and education. We hope that the development of these enterprises, through the development of equity investment, can seize the corporate dividend, thus bringing the income of "the needs of the elderly". This is the new direction and new node of equity asset investment.
As mentioned just now, because China's capital market is quite volatile, we hope to build a portfolio based on comprehensive risk management and factor dose with low pullback through Alpha and Beta's diversified breakout, so as to bring stable investment returns to investors.
It includes two directions:
One direction is to flatten the possible volatility through the so-called FOF and MOM forms. This is the portfolio investment of private equity investment funds issued by Everbright Bank in 2009 to invest in the secondary market. After 10 years of historical performance, we can see that its accumulated net value recently was 2.1%, beating the market benchmark. At the same time, we can also see that we have outperformed the market. Hedge possible risk fluctuations through different strategic investor portfolios.
Second, with the development of the Chinese market, we can see that many derivatives transactions are emerging in the Chinese capital market. These products can provide us with a relatively diversified, low rollback product portfolio.
The so-called structured products are embedded, no matter exchange rate, interest rate, or portfolio products such as stock and option derivatives trading. Structured product is a static portfolio that uses some leverage of options to bring value and realize leveraged transactions, including so-called correlation transactions. But more importantly, for a small and medium-sized investor, through structured product investment, you can achieve diversified asset allocation with limited amount of investment.
In the past, many financial institutions in China invested in overseas derivatives trading markets. Last year, China's A-share market launched ETF300 stock index futures options. Interest rate options have also been introduced recently. Whether from commodities to funds to future stock indexes, more and more derivatives transactions provide more diversified options for Chinese investors to invest in the equity market.
Everbright Bank, which recently launched Sunshine Gold Pension No.1 product in February, wants to bring investors the option of investing in medium and long term asset diversification through the all-weather asset concept of diversified asset allocation.
A brief review shows that in the future, not only the pension and enterprise pension markets have a lot of room for development, but also diversified asset management institutions can make many product designs and product arrangements around long-term limited investment.
It is hoped that the next step will better integrate the asset management and wealth management industries around the establishment of individual pension accounts. As can be seen in China, equity funds perform well, but because our investors tend to buy at the high point, many of these funds are often issued at a high valuation, but when the stock is at a low point, many investors sell their own equity funds. Therefore, we think that the return on investment is not equal to the return on investment, but through the establishment of personal investment accounts and a long-term asset allocation, investors can cross the cycle. Therefore, we hope to realize the integration of wealth management and asset management businesses based on pension households.
The second suggestion I wish to make.
First, we hope to increase the deduction amount of pension tax extension. In 2018, China also piloted an extended pension tax account. After about a year of pilot work, the effect was not very good. On the one hand, our coverage is relatively narrow, and on the other hand, our attraction is relatively poor. Therefore, we hope that we can increase the amount of our pension tax deferred account from the current 1000 yuan.
Although this may affect the tax revenue of some countries, we believe that this way can provide a good source of long-term investors for China's capital market. We can see that many local governments are under great pressure this year or in the past few years. On the one hand, because of the economic downturn, the tax source has decreased. The second reason is that our tax cuts in recent years have reduced local fiscal revenue. Third, many local governments have launched so-called guidance funds and venture capital funds to promote the transformation of local economy and production capacity. However, if the deduction amount of the so-called pension tax deferred account is increased, and the long-term capital source of the market-oriented institutional investors is made up, it can completely make up for the expenditure of the local finance on venture capital funds and the so-called guidance funds, as just mentioned. Therefore, after these two balances, it can be more conducive to the development of China's real economy.
Second, we hope to expand the scope of pension and enterprise annuity asset management institutions. Just now I saw President Zhong also mentioned whether the original public fund could be expanded to insurance asset management and then to bank asset management. The bank has two advantages that it can play its own unique role in pension management.
1. We can play a better role in the so-called alternative investment. The so-called alternative investment or non-standard investment is nothing more than the so-called low liquidity investment after improving the safety, profitability and liquidity of the investment. With the help of our long-term stickiness to public enterprises, banks can propose some better non-standard investment directions and areas.
2. Banks have their own unique advantages in terms of accounts. It is hoped to reconstruct the very important top-level structure of China's pension system based on the account, so as to better understand customers at the account level and better realize the allocation of large categories of assets, so as to realize the deferral of investors' term from short term to medium and long term and to long term. On the one hand, it can bring investors a good return system of investment products for long-term investment. Second, we hope to provide enterprise funds for the faster development of China's real economy, so as to support China's capacity transformation and the continuous upgrading and development of China's economy. Thank you!
Editor in charge: Zhao Ziniu
