by JI Yao

In December 2024, the China Securities Regulatory Commission amended the Mutual Recognition of Funds (MRF) between the Mainland and Hong Kong, raising the sales quota for Hong Kong funds in the Chinese mainland from 50 percent to 80 percent. Experts believe this will offer investors more diverse global allocation opportunities and attract more multinational asset management institutions to the Chinese market.

Morgan Stanley, a leading global financial institution, entered the Chinese market in the 1990s and has since built a diverse commercial platform, including securities, commercial banking, mutual funds, futures, and RMB private equity. Morgan Stanley Investment Management (MSIM), the investment management arm of the group, boasts nearly 50 years of expertise in global asset management, overseeing US$1.6 trillion (11.7 trillion yuan) in assets as of Q3 2024. Its team of over 1,300 investment professionals operates across 24 major markets worldwide.

Jiemian News interviewed HUANG Min, head of China at MSIM. With over 20 years of experience in global financial markets, Huang oversees client relations and domestic asset management business in China.

Jiemian News: When did Morgan Stanley enter China? Can you recount its journey in the market and the opportunities it has seized along the way?

Huang: Morgan Stanley has been at the forefront of China's capital markets since the 1990s. As one of the first international investment banks to operate in mainland China, we opened offices in Shanghai and Beijing in 1994. A year later, we partnered with China Construction Bank and other domestic and international collaborators to establish China International Capital Corporation (CICC), the first Sino-foreign joint venture investment bank in the mainland.

Over the past 30 years, Morgan Stanley has helped Chinese enterprises raise US$476.8 billion in global equity capital markets and US$649.7 billion in debt financing, totalling over US$1.1 trillion in global capital market funding. Additionally, we have participated in mergers and acquisitions involving Chinese entities worth over $620.4 billion (Data as of June 2024, sourced from Thomson Reuters and Dealogic.)

Today, we operate a diversified business platform in China, encompassing securities, commercial banking, mutual funds, futures, and RMB private equity. In asset management, MSIM invested in Morgan Stanley Huaxin Fund in 2008 and acquired full ownership in 2023. Leveraging over 40 years of industry expertise and global portfolio capabilities, we aim to support China's burgeoning asset and wealth management markets.

Jiemian News: How do you evaluate the impact of China's ongoing financial market liberalization? From a foreign institution's perspective, what does "high-level" openness mean, and what are the key factors for long-term investment in China?

Huang: China has always been an ideal market for Morgan Stanley, and we've felt the dynamism of its openness. "High-level" openness involves steadily advancing institutional reforms, expanding cross-border investment channels, and providing robust legal and regulatory support.

Over the past two decades, we've witnessed transformative changes in China's capital markets. From joining the World Trade Organization in 2001 to implementing the Qualified Foreign Institutional Investor (QFII) program in 2002, launching stock and bond connect programs, and the recent expansion of foreign public fund companies, these milestones highlight China's commitment to two-way market opening.

From a global allocation perspective, China's capital markets offer a broad and diverse range of investable assets, presenting unique return opportunities for international investors. As the world's second-largest capital market, China's equity market capitalization has grown from US$460 billion in 2002 to nearly US$12 trillion today—a 26-fold increase. For overseas investors, China provides essential diversification and a wide array of asset allocation options.

Jiemian News: What role do foreign financial institutions play in China's market, and what opportunities and challenges lie ahead?

Huang: Foreign institutions contribute significantly to China's financial market in two key ways. First, they "bring in" global resources and expertise, advancing domestic financial practices. For example, at MSIM, we've established a strong risk management culture, robust governance frameworks, and agile decision-making systems to safeguard client interests.

Second, they "go out" by amplifying the voice of the Chinese market abroad. Foreign institutions leverage their local insights to boost global investor confidence in China while offering tailored services to help clients worldwide invest in the country.

China's asset management industry is vast and brimming with potential. According to Morgan Stanley Research, Chinese households' financial assets are expected to grow to 419 trillion yuan by 2030, with an annual compound growth rate of 7.7 percent. Public funds and bank wealth management products are projected to reach 56 trillion yuan and 45 trillion yuan, respectively, with robust annual growth rates of 10.9 percent and 8 percent. This presents significant opportunities for both asset and wealth management sectors.

Jiemian News: Morgan Stanley Fund became fully foreign-owned in 2023. What changes have occurred since, and how do you leverage your unique strengths to serve domestic investors better?

Huang: In July 2023, Morgan Stanley Fund became MSIM's wholly-owned public fund company, marking a new chapter of development. Over the past year, we've made strides in team building, investment research systems, and product line optimization. We've welcomed top talent across investment research, marketing, and compliance.

In investment research, we've enhanced fund manager profiling, aligning their styles more closely with product positioning. This ensures sustainable investment approaches and better matches between products and managers' expertise. As a result, our investment team's performance has improved significantly. According to Galaxy Securities, as of November 2024, four of our products ranked in the top 10 percent of their categories over the past year, and eight ranked in the top 25 percent.

Jiemian News: What is MSIM's broader strategy and vision for China's market?

Huang: MSIM has established a diversified platform in China, spanning onshore and offshore services. In 2023, we expanded Morgan Stanley Fund's registered capital from 250 million yuan to 600 million yuan, enhancing its capacity to serve over six million clients.

We've also developed private equity businesses, focusing on high-growth sectors like renewable energy, advanced manufacturing, and healthcare. Leveraging MSIM's global resources, we aim to offer diverse solutions and professional services to Chinese clients, fostering high-quality development in the capital markets. China's importance to our global strategy cannot be overstated, and we are committed to contributing to the success of its asset management industry.