At last week’s Fund Forum Asia conference in Hong Kong, nearly half the audience (46%) said in an informal poll that China is the Asian country or region where they expect to see the most revenue growth over the next five years.

That was compared to three other choices: Southeast Asia (26%), Korea/Taiwan (21%) and India (7%).

However, a panel of regional heads of fund management firms were sceptical about this judgement.

“I’m not surprised at all [by the response],” says Christof Kutscher, Asia-Pacific chief executive at UBS Global Asset Management in Hong Kong. “Extrapolating past growth is a frequent way of forecasting, yet not necessarily the best one.”

Regulators in China have been “supportive and business-friendly” to the funds industry, he adds, but "business conditions cannot be relied upon only to improve". Still, Kutscher says he agrees to an extent with the audience’s response, since some parts of the market in China – such as pension assets – remain tiny and have huge potential to expand.

Michael Stapleton, Hong Kong-based regional managing director for Asia and Japan at First State Investments, believes five-year revenue growth should be more balanced among geographic markets than the audience suggests.

Over the next 10 to 20 years, China may well provide the best opportunities in that respect, he adds, but until then First State is likely to see more growth in Korea and Taiwan.

Jack Lin, Asia CEO of Janus Capital in Hong Kong, agrees that Korea and Taiwan are likely to be the most fertile of the four Asian markets for revenue growth in the next five years.

That said, he too is not surprised that China was voted as the likely top source of revenue growth, because onshore AUM there has at times in the past grown at compounded annual growth rates approaching 75%. This pace of growth is unlikely to continue in the future, argues Lin, due to the large number of firms – both domestic and foreign – that have entered the market.

Nikko Asset Management, on the other hand, is set to see its largest expansion in revenues coming from China, Australia and Japan, says Blair Pickerell, the firm’s Hong Kong-based head of Asia and global head of marketing.

Meanwhile, the panellists generally agreed with the audience's assessment of India as the least likely to provide revenue growth over the next five years.

India is a huge market with tremendous potential, says Pickerell, but it has proven tough for foreign firms to penetrate. It’s a very domestic market and very focused on local money-market funds, which have low margins, he adds, and numerous regulatory changes in recent years have made it hard for some firms to build market share. 

What’s more, “wonderful revenue growth doesn't necessarily translate to wonderful profit growth”, adds Pickerell.

Kutscher makes a similar point. “One day India will be deep in the money, but I don't know when,” he says, “but you need to be there to grab the opportunity. It’s all about entry strategies. There are many ways to do it, and many look very difficult and expensive.”

And, as one regional CEO told AsianInvestor during a coffee break, if a fund manager the size of UBS is finding it difficult to enter India, it will be too early and costly for a significantly smaller firm – such as his own – to do so yet.