The following story appeared in the February 2010 edition of AsianInvestor magazine. Paid subscribers can access this and other magazine stories online here. For subscription queries, please contact Stephen Tang or call +852 5239.

Shake the globe and a dreadful storm ensues. Now take a step back and look again: is that the globe, or just a snowglobe? And is that a tempest out there, or the captured image of a tranquil winter scene?

Despite the global financial crisis -- despite the funding gaps bored by plunging asset values, despite the threat of trimming promised benefits to scheme members, despite the debunking of a million investment myths -- the scene among Hong Kong's institutional investors is about as pacific as, well, as a snowglobe's menagerie.

The downfall of asset valuations in late 2008 was real and sent corporate pension scheme managers into panicked remodelling of actuarial assumptions. As retail investors marched in the streets over the mis-selling of structured products, the nightmare of marches and lawsuits against companies with money-losing Orso schemes gave pension executives nightmares.

Then the markets had a lovely rally in 2009 and these same funds have retraced their losses. By and large the territory's defined-benefit corporate schemes (known as Orso plans after the Occupational Retirement Schemes Ordinance), endowments and other liability-driven institutions are once again fully funded.

Moreover, whatever fears may have been generated in the wake of Lehman Brother's September 2008 collapse, pension funds in Hong Kong have done far better than peers in America, Europe or Japan. There are no class-action lawsuits. There's no dramatic overhaul of financial service providers. Employees enrolled in the Mandatory Provident Fund regime didn't change allocations -- the speed of the crash, and then of the recovery, saw to that. MPF providers weren't fired.

Orso schemes and other institutions have fired some managers for under-performance during the crisis, which has seen some winners and losers emerge in Hong Kong (not to mention for transition managers) -- which matters for them, but not so much to the institutional investor.

What has not happened, however, is any sense of a fundamental review about how these institutions manage money and select managers.

Hong Kong remains a consultant-driven market. Although one...

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