On November 17, the Shanghai-Hong Kong Stock Connect project celebrated its one-year anniversary. HKEx data shows that 47% of aggregate northbound quota was utilised in the year, and 36% for southbound. Slightly underwhelming, perhaps, but it pales into insignificance when you consider the bigger picture. The initiative represents one of the biggest steps that China has taken in its internationalisation mission. Roll on its sister scheme in Shenzhen.
Building bridges and creating connectivity is fundamental to the development of Asia’s capital markets; there’s no more important task in this region. It is why we added ‘contribution to capital market development’ as a new category in our second annual Institutional Excellence Awards (see page 16). Our inaugural winner for this was the Monetary Authority of Singapore, singled out for its unstinting efforts in fostering domestic and regional co-operation and expansion.
There have been some standout advances in Asia over the past 18 months. Two cross-border fund schemes were launched, one for Asean and the other between Hong Kong and China. For the former, only 11 funds from five fund management firms have been approved so far. Still, the fledgling scheme is operational and growth will come as other Asean members join in, with Indonesia seen as of potential in terms of expanding the Islamic funds market.
For mutual recognition, 17 Hong Kong-domiciled funds have been accepted for the northbound scheme and about 40 mainland China-domiciled funds have applied for southbound, with at least 10 of these firms having set up H-share classes. It, too, has been slow burn, with no approvals as yet. The process has suffered delays, partly as Chinese authorities diverted resources to manage the stock market turmoil of mid-summer. But the Securities and Futures Commission has said the first approvals will occur before year’s end.
A third example of positive change comes in Japan, where the Government Pension Investment Fund underlined its leadership by moving to improve corporate governance, signing up to the Stewardship Code and UN-backed Principles for Responsible Investment and including the proactive JPX-Nikkei 400 as a benchmark. In this way it aims to promote the sustainable growth of companies through investment and dialogue and sweep away the complex web of cross-shareholdings that are not in the interests of shareholders.
Yet there is so much more to be done, not least improving the depth and transparency of Asia’s bond markets (see page 50). That will be the game-changer that drives investment and funds regional growth. But we shouldn’t be discouraged by slow uptake in the three examples above. Yes, they are taking baby steps, but they offer a glimpse of what greater cohesiveness will bring.
04 On the move
McKay co-heads global distribution at AGI; Shih becomes president of UBS wealth unit; Vande Walle fills SE Asia sales role at Templeton; Lynn gets global product position at Nikko AM; Aberdeen makes hires in Taiwan, Malaysia; Ma takes over as CIO at Noah
08 Regulatory Roundup
You can’t ignore India
The government has eased foreign investment rules in 15 sectors, spelling good news for private equity firms
10 Data Centre
Banks continue to dominate fund sales and advice, but reliance on independent advisers and digital channels is poised to grow
12 Asset Owners
Is an environmental, social and governance policy integral to long-term investing?
16 Institutional Excellence Awards
AsianInvestor identifies the institutions setting the standards for best practice in the region
26 Q&A: Hong Sa Chan, head of alternative investment, Korea Post Savings Bureau
28 News: Korea’s KIC, NPS endure senior departures; family offices weigh club deals; Ping An eyes overseas assets; Chinese insurers active in property
Fund Selector Forum Asia
The future of fund distribution was discussed by industry leaders at AsianInvestor’s second fund selection event
34 Q&A: Rodolphe Larque, head of mutual funds and ETFs, Asia Pacific, Credit Suisse Private Bank
36 News: Standard Chartered closures ‘free of buy-side impact’; Julius Baer sets up Japan desk; Taiwan seen as top ILP market; Aussie planners ramp up Asia exposure; Tianhong talks China distribution
40 Fund Managers
China pensions advance
The government is making reform of public pension funding a top priority
44 Asia is the place to go for value, according to a panel of investment strategists
48 Winners and losers in TPP Vietnam and Malaysia will benefit from cross-border trade pact, but will China?
50 China bonds: Expansion of domestic fixed income seen as defining moment with profound Asia implications
52 Alternative Investments
Next stop Europe?
Inflows means alternative managers in Asia are in no rush to capitalise on new marketing opportunities
54 News: Robeco reveals new Asia strategy; Nomura builds out in Taiwan; smart-beta ETFs tipped for growth; UBS AM readies first QDLP funds
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