Institutional clients’ demands are rising but they are offering asset managers ever-greater chunks of business, according to senior executives at an AsianInvestor forum yesterday.
The internationalisation of the renminbi was also highlighted as being of particular benefit to asset managers, who will have global selling opportunities when the currency is fully liberalised.
Concern was expressed, however, about a potentially unbalanced trading relationship between Hong Kong and mainland China when mutual recognition finally goes live.
At AsianInvestor’s 4th Art of Asset Management forum in Hong Kong yesterday, CEOs discussed the state of the regional industry, what their biggest concerns were and where they saw growth opportunities.
Mark Browning, Asia managing director at Franklin Templeton Investments, said there were large regional institutional opportunities for fund managers.
He said: “In the Asia-Pacific region there are big opportunities in institutional business. Institutions have become far more sophisticated and far more demanding. So it is moving from more of a relationship of being an aggregate mandate to much more of a partnership.
“So we’ve moved this to more of a partnership where they actually want to talk about their whole portfolio rather than just the mandates you’re managing for them. They also want access to risk management tools from the company."
And there were also additional requirements being placed on fund managers, said Gerry Ng, Baring Asset Management’s CEO for Asia ex-Japan. He said that institutional investors were looking to take a more active role in their portfolio and learn more about the managers’ techniques.
Ng explained: “Nowadays quite a few institutional investors are asking if we provide opportunities for their employees to be posted in offices [around the world] to learn about the various techniques related to fund management. It’s not just about risk management but beyond that and in terms of how you decide on asset allocation, how you make forecasts and how you look at risk, tracking error and various portfolio characteristics.
“This is becoming part and parcel of the whole relationship and not just purely delegating asset management but also giving something back in return. It’s gone beyond purely outsourcing of investment services."
The raft of cross-border trading initiatives which China has rolled out in recent years and months was generally welcomed by the speakers at the forum.
JH Rhee, chief executive of Mirae Asset Global Investments (HK), was particularly effusive about the opportunities offered by the schemes.
Rhee described Stock Connect as a “huge opportunity”, saying that his firm's UCITS funds had just gained permission to trade on it from Luxembourg's regulator, the CSSF or Commission de Surveillance du Secteur Financier.
However, on the upcoming mutual recognition he pointed out large differences in distribution and demand between mainland China and Hong Kong which could lead to an unbalanced trading relationship when it was launched.
Mark Konyn, chief executive of Cathay Conning Asset Management, pointed out the opportunities presented to asset managers with the internationalisation of the renminbi. He said that there would be numerous opportunities for the asset managers that have the capabilities to offer products globally when the renminbi was fully liberalised, and indeed when Chinese equities gained admittance onto international benchmarks such as MSCI.
AI Week continues today with the start of a two-day conference in Hong Kong – the 10th Asian Investment Summit at the Ritz-Carlton hotel in Kowloon.