The proposed Asia Region Funds Passport (ARFP) offers the best chance for developing a single Asia-wide cross-border scheme to rival Europe’s Ucits, an industry roundtable heard.
Organised by AsianInvestor* and featuring panelists in Hong Kong, Singapore and Australia, the debate included scepticism of the ARFP scheme, which is scheduled to be introduced in 2016 and comprises Singapore, Korea, Australia and New Zealand.
Nick Hadow, director of business development in Singapore at Aberdeen Asset Management, said it looked as though finance ministers in Australia had thrown 25 darts at the Asian dartboard and all but two had missed. “Then you add on Korea and Singapore. It looks like a hotchpotch approach,” he suggested.
However, when asked which of the three proposed passport initiatives – alongside Hong Kong-China mutual recognition and the Asean scheme – had the best chance to expand membership, Hadow conceded that HK-China mutual recognition would likely add Taiwan, and Asean was also restricted by its membership.
“So the only one with long-term hope is the Apec scheme,” he noted, adding that he would be astonished if Singapore was not having its own conversations on mutual recognition with China.
Robert Grome, Asia-Pacific leader of the asset management group at PwC, was positive about the ARFP scheme. “It will take longer to come to market, but it is going to be thoughtful and well-researched,” he added. “The challenge is how to make any Asia-wide scheme distinctive to make it attractive to investors.”
Grome said there would need to be a big cost advantage in terms of accessing the scheme when it is fully rolled out. “So there has to be a technology advantage so that it becomes an efficient platform to take product to investors across countries.”
Quizzed on rumours that the ARFP platform could be purely online, Andrew Bragg, director of policy and international markets at Australia’s Financial Services Council, replied it was too early to say.
“People have talked about different types of delivery. Technology could be the thing that makes one of these schemes and helps you to leapfrog the other vehicles,” he noted.
Bragg conceded that there was scepticism about the ARFP scheme, and that it would take a long time to come to fruition. He agreed that to achieve critical mass it would potentially need to double its current membership from four to eight.
But he expressed confidence that the ARFP scheme would attract more members. Asked where his confidence came from, Bragg said “anecdotal information you glean from a number of conversations across the region”.
“We get a sense there will be some movement on that front in terms of further economies looking to join,” he added.
Asked about the potential for Japan joining the Apec scheme, Bragg noted that the Japanese government’s policy under prime minister Shinzo Abe was to be more exposed to international markets.
“Japan would be an important market to join the scheme,” he said. “It and a number of Asian jurisdictions have been part of the working group. As far as we know, Japan is still debating whether to join. But realistically things move slowly.”
* A full transcript of the discussion 'The Future of Fund Passporting in Asia' will feature in the forthcoming April issue of AsianInvestor magazine. The event was sponsored by RBC Investor & Treasury Services.