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Media Focus| Fang Xinghai: Promote banks and securities to allocate assets with future market

Fang submitted 2020-08-25 14:09:06

Fang Xinghai, the vice chairman of CSRC, stated at the “2020 Qingdao, China Fortune Forum” recently. Since this year, under the impact of the pandemic, there is profound changes for global politics and economic layout, and the price of global varieties of assets is volatile. In this case, it is more difficult to manage global assets, which highly present the fortune value of domestic commodity investment.

Fang Xinghai introduced that commodities as an important asset category play multiple roles in wealth management. First, there are many types of commodities that can be trade, with flexible and abundant transaction ways. The pedigree of commodity categories is diverse, covering energy, non-ferrous metals, black, agricultural products, precious metals, etc. The characteristics of different categories of commodities are obvious different. Commodity future transaction can operate both in long and short side with rich investment strategies. Second, bulk Commodities has unique features of risk and return. Compared with classic “60% stocks+40%bonds”, the return of investment portfolio shows a fat tail and left-biased characteristics, while the return of commodity index has a higher probability of right-skewed. Third, the correlation of commodities is low with stocks, bonds and other relative assets, and the optimization effect on investment portfolios is obvious.

Fang Xinghai said that compared with the international market, our country started relative late for the commodity market. Currently, the bulk commodity investment still lacks in residents’ wealth management. Under the new situation, Commodity should exert more positive function in helping a wealthy and strong country. To promote the development of wealth management market, we should focus on five points below in the future.

One is to further enrich products and provide more high-quality products for wealth management. Rich and diversified investment tools and products are the foundation for the development of the wealth management market in the bulk commodity sector. Our country's commodity derivatives market still has great potential to be tapped. In the next step, we must continue to improve the construction of the futures product system and accelerate the development and listing of commodity indices and more commodity futures options. Support relevant institutions to develop more investment products such as commodity index funds and commodity index ETFs.

The second is to further unblock the channels for investors in the commodity market to manage wealth. In the future, we will work with relevant departments to further promote institutional investors in domestic banks, securities, insurance, public funds, pension insurance funds and other institutions to use commodity futures markets for asset allocation. On the other hand, various wealth management institutions are also encouraged to further broaden the allocation channels of bulk commodity assets to meet the needs of investors in all directions and from multiple angles while meeting the requirements of risk prevention and compliance.

The third is to promote greater opening up of the futures market and build a new global wealth management landscape. Gradually internationalize qualified commodity futures and options varieties, connect with international practices, and use our country's ultra-large-scale market advantages to attract more foreign investors to participate in the domestic commodity futures market for trading, risk management and asset allocation. Improve the global pricing influence of our country's commodity futures, and improve the renminbi commodity pricing and settlement system for the globalization of wealth management.

The fourth is to strengthen supervision and improve the governance capabilities of wealth management institutions. Effectively exert the effectiveness of supervision, accelerate the construction of the over-the-counter derivatives transaction report database, do a good job in risk analysis and judgment, and strengthen the review of products involving a wide range of customers and high risk volatility. We urge wealth management institutions to stick to the bottom line of compliant operations, improve risk control indicators, strengthen investor suitability management, and firmly hold the bottom line of avoiding systemic risks.

Fifth, continue to do a good job in investor publicity and education. "Business development, investment education first." For a long time, the public in our country did not know much about commodity investment or the commodity futures market, and investor publicity and education work has a long way to go.

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