Mutual fund assets invested with Chinese money and wealth management firms recorded a 36% year-over-year increase in 2020 to €2.44 trillion ($3 trillion).
According to a study conducted jointly by Luxembourg for Finance — the country's agency for financial center development — and PwC Luxembourg, assets also increased at a 23.9% compound annual growth rate in the past decade, driven by steady investments from European Union-domiciled investment funds.
European investment in Chinese securities run by Chinese firms increased at a compound annual growth rate of 10.4% over the 20 years ended in June, to €298.2 billion, the study said.
Allocations by Europe-domiciled investment funds increased as a proportion of all investments in China to 56.2% at the end of 2020, up from 33.1% at the end of 2017.
Investments by U.S. investment funds fell as a share of all investments in China in the same period to 14% at the end of 2020, from 15.7% at the end of 2017. Hong-Kong-domiciled funds' investments declined as a share to 11.8% from 23.4%, while U.K.-domiciled funds' investments fell as a share to 0.9% from 2.2% in the same period. Investments of funds based in other markets declined as a share to 17.1% from 25.5% in the period.
Chinese investments in European assets also grew over the 20 years ended in June at a 9% compound annual growth rate, to €267.9 billion, composed of about 49% European equities and the remainder in bonds.
"The recent regulatory developments in China and the strong interest shown by global players in accessing the Chinese market and vice versa strongly suggests that the financial sector represents a veritable opportunity to foster a lucrative, long-lasting financial relationship," said Dariush Yazdani, market research center leader for asset and wealth management at PwC Luxembourg, in a news release Monday.