On June 6, the fourth member representative conference of the Asset Management Association of China was held in Beijing, where CSRC Chairman Wu Qing delivered a landmark speech. Facing a massive market exceeding 85 trillion yuan, Chairman Wu Qing not only reviewed the assets but also directly set the tone for the development of the fund industry during the 15th Five-Year Plan period.

Regulators are "setting rules" and "guiding direction" for the fund industry. The old rough model of "scaling up and making quick money," betting on tracks, and style drift is completely unworkable.

There are only two core tasks for the future: first, to honestly help ordinary people earn money (with high returns); second, to invest money in hard technology that the country truly needs (new quality productive forces).

| 85 Trillion Yuan Base Review: From "Scale Expansion" to "Survival of the Fittest"

After nearly 30 years of development, China's fund industry has managed assets under management of over 85 trillion yuan, ranking second globally. However, large scale does not necessarily mean high quality; the industry is undergoing profound structural adjustments.

Public funds are undergoing a major shift from "focusing on scale" to "focusing on returns," striving to align with investors' interests through reforms such as fee reductions and standardized performance benchmarks.

Meanwhile, the private equity industry has witnessed a brutal "survival of the fittest," with over 20,000 institutions being wiped out, showing a trend of "quantity decreases but quality increases," with the leading effect becoming increasingly apparent.

| The "Mutual Commitment" of Public and Private Funds: Strong Returns and Investing in Hard Technology

Chairman Wu Qing put forward differentiated development requirements for public and private funds, with a very clear core logic:

For public funds, it is essential to resolutely curb persistent problems such as "betting on the track and high-level issuance." We must make great efforts to enhance investment research capabilities, create more weight-bearing low-volatility and other stable products, and accelerate the transformation to a "buy-side investment advisory" model.

In short: Don't always think about making management fees; truly help clients make money.

Private equity venture capital funds are entrusted with the important task of cultivating "new quality productive forces." Regulators encourage state-owned funds to improve fault-tolerance mechanisms, guide private equity institutions to invest early, invest small, invest long-term, and invest in hard technology, enhancing their ability to keep pace in the "uncharted territory" of innovation.

| Institutional Differentiation and Technology Empowerment: Rejecting "Pseudo-Innovation," Competing on Uniqueness and Compliance

Regarding institutional development paths, regulators clearly oppose "involution" and "pseudo-innovation." Leading institutions must comprehensively enhance their overall strength, while small and medium-sized institutions must stop competing on scale and pursue a path of specialization and quality.

At the same time, the industry should steadily and orderly explore the application of new technologies such as AI and big data, accelerating digital transformation. However, innovation must be matched with risk control capabilities, resolutely curbing conceptual speculation, complex nesting, and idle channel circulation.

Regarding the highly watched algorithmic trading (quantitative trading), Chairman Wu Qing has given a clear regulatory stance. Regulators will conduct in-depth research and continuously improve mechanisms, with the core principle being "emphasizing fairness and standardization."

This means regulators will strengthen targeted monitoring, effectively prevent some institutions from abusing their technological advantages, and resolutely crack down on market manipulation and other violations.

Quantitative trading must operate within a compliant framework and cannot come at the expense of the interests of small and medium investors or market fairness.

| Three signals align with regulatory guidance

Signal One: The transformation of public funds as "buy-side advisors" accelerates

Regulators strongly promote "heavy returns" and "buy-side advisory," meaning that fund companies that can continuously generate absolute returns for investors and have strong asset allocation capabilities will gain more market share and valuation premiums in the future.

Signal 2: Venture capital funds are benefiting from the "patient capital" policy dividend

With the improvement of the fault-tolerance mechanism for state-owned funds and optimization of assessment standards, the bottlenecks of "fundraising, investment, management, and withdrawal" in the primary market are expected to gradually be resolved. Truly hard-tech VC/PE firms with industry insight and the ability to invest early and invest small will usher in a better development environment.

Signal Three: The quantitative industry has entered the stage of "compliance clearance" and "high-quality development."

The improvement of algorithmic trading regulation will prompt quantitative institutions to shift from competing in technology and speed to focusing on fundamental research and compliance risk control. Quantitative institutions with deep fundamental research foundations will stand out.

Kingtech Perspective | Venture capital firms focused on hard technology

Focus on leading public fund companies in the equity investment field that have deep moats, have taken the lead in transforming into buy-side advisors, and have stable product lines (such as a wide range of low-volatility products with weights).

Under the policy guidance of "invest early, invest small, invest in hard technology," venture capital institutions that have been established early in "new quality productivity" fields such as semiconductors, artificial intelligence, and new energy, with rich project reserves, as well as listed venture capital platforms holding shares, are expected to see a double blow in performance and valuation.

With the standardization of algorithmic trading regulation, leading quantitative private equity firms that provide financial institutions with compliance risk control systems, data services, and compliance advantages will gain a larger market share amid industry reshuffling.

The 85 trillion yuan fund industry is standing at a new starting point during the 15th Five-Year Plan. The regulators' stance essentially forces the entire industry back to the core of "entrusted by others and managing wealth on behalf of clients."

Compliance pains and model transformation may make some institutions uncomfortable, but only institutions that truly put investors' interests first and direct capital to the forefront of real economic innovation can become genuine "first-class investment institutions" in this major reshuffle.