Room for growth

The investment management industry is developing at a rapid pace in the Asia-Pacific region despite the fact that it has to contend with different regulatory environments and even regional fragmentation.

But Asian investment managers have been able to respond quickly to the dynamics of the market, according to a report released recently by consulting firm KPMG, titled State of the Investment Management Industry in Asia Pacific.

The region’s healthy demographics and rising levels of wealth have paved the way for growth.

One factor affecting the Asia-Pacific region is the increased influence of global investment trends.

Foreign mutual funds are recognising the need for local expertise, and many have managers, research analysts and distribution set-ups in the region.

The Asia-Pacific region’s diversity of cultures and languages also pose a challenge for companies looking for growth in the region.

The report also notes that the global trend of polarisation of the market between large, branded fund managers and niche institutional players like hedge funds is also prevalent in the region.

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Regulatory constraints like currency and capital controls, criteria for foreign institutional investors and conflicts due to multiple regulatory bodies are major hurdles for companies planning to enter the Asia-Pacific market.

But despite the hurdles, Japan and Hong Kong dominate in terms of the number of funds and fund managers, which have the largest assets under management. For instance, life insurance companies in Japan have more AUM than their counterparts in the rest of the region combined. The region’s preferred medium of investment is equities.

—Clifford Alvares