China Stewardship Report 2020
To many outsiders, Chinese equity investing might conjure up images of a huge, freewheeling market where millions of retail investors revel in speculation and sustainability is an alien concept. But developments on the ground in China show how stereotypes like this are swiftly becoming outdated. China’s markets have been changing shape over the last decade, as institutional influence expands in the onshore market and foreign investors pile in.
This paper employs both a proprietary survey of voting data and anecdotal evidence from corporate engagements to demonstrate how investors, companies and regulators in China have all played a part in building what is today a solid foundation for sustainable investment and engagement. Indeed, the clear picture that emerges from our study is one of steady progress across the board when it comes to investment stewardship in China.
In this, Fidelity International’s first China Stewardship Report, we examine the underpinnings for these developments across three main areas. First, the key starting point has been a steady decline in ownership concentration, which has opened the door for non-controlling interests to play a more active role in the governance of companies.
Second, despite prevailing stereotypes the market has gradually rebalanced away from being retail driven: individual investors owned 95 per cent of free-float shares in 2003, but this fell to 70 per cent in 2010 and stands at just over 50 percent today.
Third, foreign participation has jumped over the last few years as China opens its financial borders, and this has helped bring domestic practices more in line with global standards.
This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”). Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity International.
Prior to making an investment decision, retail investors should seek advice from their financial adviser. This document is intended as general information only. Please remember past performance is not a guide to the future. Investors should also obtain and consider the Product Disclosure Statements ("PDS") for the fund(s) mentioned in this document before making any decision about whether to acquire the product. The PDS is available on www.fidelity.com.au or can be obtained by contacting Fidelity Australia on 1800 119 270. This document has been prepared without taking into account your objectives, financial situation or needs. You should consider such matters before acting on the information contained in this document. This document may include general commentary on market activity, industry or sector trends or other broad-based economic or political conditions which should not be construed as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be construed as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity's funds is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. References to ($) are in Australian dollars unless stated otherwise. Details of Fidelity Australia’s provision of financial services to retail clients are set out in our Financial Services Guide, a copy of which can be downloaded from our website.
© 2021 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited.