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Foreign investors to focus on financial services sector: Report

By Fei Ya (China Daily)
Updated: 2007-05-04 09:04

China's banking, private wealth management and capital market sectors
will be the key focus points for foreign investment in the next five
years, a new Mercer Oliver Wyman report has said.

The report said that the consolidation of banks and exchanges and
innovation of financial products and services will be major factors
driving growth in the financial services industry in the coming years.

"China has undertaken crucial legal and regulatory reforms to open its
financial services industries to foreign investment, and further progress
is anticipated," Vivien Lai, a director of the financial services firm,
said.

The banking sector will see increasing consolidation with a changing
regulatory environment. Another dynamic sector will be exchanges, which
had the best performance of any sub-sector in the whole financial sector,
according to the report.

"Following an active 2006, further evolution of the sector is expected as
exchanges expand both across asset classes and across borders," the
report said.

Exchange traded funds and retail structured products will be among the
most important and popular products in the coming years, according to the
report. For consumers, demand will grow for innovative equity release
products that allow individuals to tap and manage illiquid wealth to
provide cash flow.

"Emerging markets such as China have become critical to the success of
leading global financial services firms. Given the diversity of
opportunities within emerging markets and the spectrum of legal and
regulatory risks involved, it is often important for firms to develop
multiple emerging market strategies from onshore/offshore go-it-alone
plays and partnerships to outright acquisitions of domestic incumbents,"
Lai said.

One of the key growth strategies for Chinese financial players is to look
to foreign capital and expertise to help them prepare to compete in the
global marketplace, the report said.

(For more biz stories, please visit Industry Updates)

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