Goldman Alum Bets He Can Double Haitong International’s Assets

(Bloomberg) -- Wang Shengzu, a Goldman Sachs Group Inc. veteran who was just named global head of asset management at Haitong International Securities Group Ltd., is taking a contrarian approach as he bets on doubling the money his new firm oversees.  

As others are growing by offering low cost, passive investment strategies such as exchange traded funds, Wang, is looking to expand assets to HK$100 billion ($12.9 billion) in three years with an active investment strategy, and shifting more into stocks from bonds.    

A key part of the push will be to tap the firm’s Chinese investment banking clients, offering separately managed and tailored accounts, Wang said in an interview. “In Hong Kong, many big Chinese funds are pure play passive managers with a focus in exchange-traded funds but we are very active,” he said. “The strength of our investment banking complements us well.” 

The 43-year-old, who was co-head of the Asia investment strategy group at Goldman Sachs, was poached to help the foreign arm of China’s sixth biggest broker to expand in fee-based businesses such as asset management as it cuts back on global risk. The firm earlier this year decided to close some businesses, including fixed income sales and trading in the U.S., following similar cutbacks in London last year.

While relatively small, its asset management has grown tenfold over the past decade to having more than HK$50 billion under management. It has issued three ETFs, but 98% of its funds are under active management, with almost 70% focused on fixed income. 

The concentration in fixed income is due to historical reasons, Wang said, but he’s now looking to lower that share to 40% and boost stocks to the same level. Alternative investments and money fund products will cover the rest, he said.

“There are many things we can do,” he said. “We can manage money for entrepreneurs looking to divest after successful listings or export firms in need of cash management and forex hedging.” 

He currently oversees a team of about 50 investment professionals and plans to add about a dozen more, with the number dependent on asset growth. 

The bet on stocks comes as Beijing is pushing to deleverage highly-indebted Chinese developers and to encourage more direct financing. Equities are likely to outperform in a low interest rate environment, he said, betting primarily on value stocks such as energy and transportation companies as the economy recovers from the pandemic. 

Fierce Competition

Wang said the firm is committed to issuing ESG-themed ETFs but will be “prudent” given the “fierce competition” in that area.  

Last month, in a partnership with London-based Tabula Investment Management, it issued the world’s first ESG Asia ex-Japan junk bond ETF in Europe. 

The broker’s largest ETF, Haitong MSCI China A ESG ETF, has amassed HK$433 million since inception last year and registered a return of 1.2% so far this year, lagging its benchmark’s 1.6% return. 

Wang shrugged off any dangers to the Chinese asset management industry from President Xi Jinping’s stepped up push for “common prosperity.”  

“It’s more fitting to call it inclusive prosperity since China never said it will divide up the wealth, but reduce poverty and give small firms access to financing,” he said. “Fear or not of common prosperity, China’s rich should buy more overseas given their high concentration in RMB assets.”  
 

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With assistance from Bloomberg