AsianInvestor is pleased to announce the launch of our first Asset Owner Insights for Southeast Asia report, a comprehensive guide to the behaviour of the region’s largest and most influential institutional investors.
The 74-page report provides detailed insights into asset allocation strategies and portfolio breakdowns of leading asset owners, based on the latest available data. It is the first in a series of such studies across Asia, which will combine detailed statistics with analysis of the structure and priorities of institutional investors.
Southeast Asia offers a particularly broad spectrum of asset owner sophistication. On the one hand it boasts world-class investors such as Singapore’s GIC, while it also contains fledgling institutions in the early stages of building international multi-asset portfolios.
Outside of Singapore, many of Southeast Asia’s asset owners remain heavily focused on local market investments, particularly in fixed income. But with interest rates in many countries at historically low levels and stocks not always proving a wise investment, many of these investors are broadening their investment horizons.
Meanwhile, the relative success of Singapore’s GIC and Temasek has encouraged other countries, such as Indonesia, the Philippines and Thailand, to consider setting up sovereign wealth funds.
The Asia Owners Insight report covers these dynamics, analysing the top institutional investors in eight markets: Brunei, Indonesia, Malaysia, Philippines, Singapore, Timor Leste, Thailand and Vietnam.
It provides information on their latest assets under management (AUM) and allocations by geography and asset class, as well as analysing each investor’s likely future areas of investment.
The report also offers an overview of each market, including a breakdown of the latest regulatory trends impacting local asset owners. This is designed to provide useful context to the investment behaviour of these investors.
Below are some sample insights contained in the report:
— Brunei Investment Agency, a part of the country's Ministry of Finance, follows a diverse investment strategy. It has asset holdings in markets including the US, Japan, Western Europe, Middle East and Southeast Asia.
— Indonesia’s Taspen, a state agency tasked with providing social insurance to civil servants, is heavily invested in fixed income. Around 74% of its $10.68 billion was allocated to debt instruments, such as government securities and corporate bonds, at the end of 2015. Equity and mutual funds made up another 9%, while the balance was in time deposits in state banks and direct investments.
— Malaysian second biggest state pension fund, Kumpulan Wang Persaraan (Kwap), pursues both active and passive investment strategies when investing its assets. However it refrains from investing, wherever possible, in companies principally engaged in alcohol, tobacco, gaming and manufacturing equipment primarily designed or designated for military purposes.
— Of the $70.4 billion in foreign-currency reserves held by the Philippines’ central bank at the end of 2016, about $52 billion was invested in foreign securities while $18 billion was parked in foreign bank deposits.
— Singaporean insurer NTUC Income, which aims to provide affordable cover for workers in the city state, allocates to funds that can invest into a variety of financial instruments, including equity and debt securities and an array of derivative instruments.
— The main institutional fund in Timor-Leste, the Petroleum Fund, can allocate up to 50% of its AUM to equities, including up to 5% in other forms of investments, after a change in legislation in 2011.
— Thailand’s Government Pension Fund has made large changes to its asset allocation in recent years. In 2016 it announced it was considering allocating a portion of its investments into environmental, social and governance (ESG)-focused funds.
— The AUM of the State Bank of Vietnam, the country’s central bank, has fluctuated in recent years. Currently it stands at $38 billion, with fixed income accounting for most of that. Analysts have suggested the central bank should consider greater use of derivatives to create tools to support risk prevention and management.
For more information on the Asset Owner Insights Report for Southeast Asia or plans for future reports focused on other areas in Asia, please contact Vicki Shaw, business development manager for Haymarket Financial Media, by email at [email protected].