by JI Yao

Switzerland's Pictet Group, which oversees 694 billion Swiss francs (US$772 billion) in assets, is stepping up its push in China, targeting long-term growth opportunities in green finance and local asset management. As of June 2024, its institutional and fund arm, Pictet Asset Management, managed 254 billion Swiss francs.

Jiemian News interviewed Junjie Watkins, equity partner at the Pictet Group and CEO of Pictet Asset Management Asia (excluding Japan). Watkins shared her insights on China's leadership in the environmental sector and the abundant investment opportunities it offers. She affirmed Pictet's commitment to long-term growth in the Chinese market, emphasizing plans to solidify its local presence and explore opportunities, with the goal of participating in China's public fund market.

Jiemian News: When did Pictet enter the Chinese market? Could you reflect on the reasons for entering the market and the development process? What benefits and opportunities have you gained?

Watkins: Pictet established its Shanghai office in 2020, marking its 30th global location. Expanding the local market amid the pandemic underscores Pictet's long-standing philosophy of long-termism.

In fact, Pictet is no stranger to the Chinese market. Over 20 years ago, we began uncovering investment opportunities in China for international clients from Geneva, London, Hong Kong, and Singapore. In 2015, Pictet became one of the first international asset managing firms to launch UCITS (Undertakings for Collective Investment in Transferable Securities) funds, providing global clients access to China's RMB bond market.

Through programs like QDII, QDLP, MRF, and WMC, Pictet has offered domestic investors access to high-quality overseas products.

China's asset management industry has advanced rapidly, now ranking among the world's leaders in scale. China's high-level opening-up policies provide foreign asset managers with favorable opportunities to invest, serve, and establish roots in the market. We plan to leverage our strengths and enhance our research capabilities, such as in thematic equity and RMB bonds, to share our deep global investment expertise with Chinese clients and investors.

Jiemian News: What motivated Pictet to expand in China despite market uncertainties? How do you view the long-term prospects of China's capital markets?

Watkins: At Pictet, we emphasize patience and a long-term perspective. We avoid rushing decisions, preferring a measured and planned approach to our long-term strategies in China. This long-termism has enabled Pictet to navigate numerous economic cycles, wars, and crises over its 220-year history while maintaining steady growth.

Our decision to establish an onshore presence aligns with our forward-looking vision and long-term principles. It allows Pictet to apply its expertise in investment strategies to better serve Chinese investors with top-tier solutions.

For instance, in 2000, while many pursued internet technology stocks, Pictet identified opportunities in water resources and launched one of the world's first water-themed investment strategies. Over the years, this has grown to be a leading strategy globally. Today, our thematic investment strategies span areas such as clean energy, forestry resources, and the circular economy, solidifying our industry leadership.

Addressing global environmental challenges is impossible without China. China is a global leader in green technology and a model for decarbonization, with unparalleled capabilities in solar panels, wind turbines, and EV batteries. Its industrial restructuring and reduced reliance on high-emission manufacturing further reinforce our confidence in China's environmental opportunities, particularly in green transportation, renewable energy, and industrial decarbonization.

Jiemian News: How can foreign institutions entering China contribute to the market's growth? What opportunities and challenges lie ahead as China's financial markets continue to open?

Watkins: The steady opening of China's financial markets has led to significant growth in the asset management sector, with assets under management reaching 141 trillion yuan by the end of 2023. With an annual growth potential of approximately 9 percent, the market could reach 275 trillion yuan by 2030.

Over the past decades, foreign institutions have entered China, offering world-class financial products and services while fostering integration with international markets. Mechanisms like QDII, QDLP, and MRF have expanded, creating new opportunities for foreign players. Enhancing policy efficiency and approval processes for such programs could further drive cross-border investment.

China's evolving financial ecosystem benefits from global expertise. For example, Pictet's nearly three decades of experience in thematic equity investments—particularly in environmental themes—position us to bring specialized strategies to the domestic market. Similarly, the increasing integration of Chinese bonds into global indices presents an attractive asset class for international investors, offering low volatility and stable returns.

Jiemian News: How can China attract more foreign financial institutions and long-term capital?

Watkins: Highlighting China's investment opportunities and focusing on long-term trends are crucial. For instance, China's strong commitment to achieving its dual-carbon goals provides significant opportunities in renewable energy, EV supply chains, and green technologies.

We believe sustainable development and long-termism are not just challenges but also investment opportunities. Over the years, Pictet has actively directed capital toward environmental solutions, science-based climate goals, and engaging companies lagging in ESG practices.

China's positive economic signals in recent policies further boost market confidence. Continued efforts to stimulate consumption and stabilize the economy can enhance foreign institutions' confidence in long-term investments in China.

Pictet remains committed to leveraging our expertise in sustainability and long-term thinking to deepen our presence in China, ensuring we provide clients with enduring value.