Hong Kong, Singapore “least attractive” institutional markets

AMP Capital's Asia head says Hong Kong and Singapore are appealing in terms of wholesale but not institutional business, as she assesses where the best opportunities lie in the region.
Hong Kong, Singapore “least attractive” institutional markets

The Asia head of Australian asset manager AMP Capital has branded Hong Kong and Singapore the least attractive markets in Asia for institutional business and pointed to Taiwan as the least appealing for wholesale business.

Kerry Ching, managing director for Asia at AMP Capital, said the Singapore and Hong Kong institutional markets were already saturated with fund houses. She was speaking yesterday at a seminar in Hong Kong organised by the Association of the Luxembourg Fund Industry.

What’s more, noted Ching, asset owners in Hong Kong and Singapore are not proactive when it comes to awarding new mandates, to the extent that managers must wait for incumbents to be fired before an opportunity comes up.

As for wholesale business, she said Taiwan used to be a lucrative market but was now the least attractive. She blamed this on new regulations allowing only selected foreign firms to have “a normal process of getting funds approved for distribution”. Ching also highlighted the market’s high churn rate, which makes it a very competitive environment.

As of July, only 16 out of 55 foreign fund houses operating in Taiwan had met the stricter criteria for the sale of offshore funds. Morever, a more stringent regime, dubbed the “deep cultivation plan”, will be implemented on October 15, which will make access to the market tougher, particularly for fund houses with no existing onshore business.

Market attraction

Turning to what she saw as the most attractive institutional markets in the region, Ching named China, Japan and Korea. She cited China’s growth prospects and the rising demand among Korean asset owners to look overseas to boost returns.

Ching said Japan had its challenges but remained attractive. Certainly, institutional investors there such as insurers and pension funds are moving to increase their offshore exposure.

For wholesale business, she labelled China, Korea, Hong Kong and Singapore as the most attractive markets, the latter two because of their status as private banking hubs.

In contrast, Pieter van Deursen, a member of the strategic product development team in Asia at Robeco, said Taiwan was an attractive wholesale market. The Dutch fund house recently switched master agents in Taiwan from Shin Kong Investment Trust to Nomura. 

He also said Australia provided good business opportunities, as the pension-driven environment was a good fit for Robeco’s investment strategy, which is geared towards managing retirement money.

Ucits versus Asia passports

On the question of how effective Europe’s Ucits fund structure would be, given the rise of various Asian fund passport schemes, van Deursen said Ucits remained the best choice in light of its flexibility.

There is still a lot of uncertainty around the passporting schemes in the region, he noted, as there remain issues with tax and market protectionism.

However, some markets are not very receptive to Ucits products as they want to build up their domestic funds industry.

Indonesia is an example, said Rosemarie Kriesel, Hong Kong-based managing director at RBC Investor and Treasury Services, another panelist. The country hasn’t joined any of the regional fund passport schemes, but could be a game changer if it did, she noted.

¬ Haymarket Media Limited. All rights reserved.