Singapore was named the country with the most pragmatic post-crisis regulatory regime for the funds management industry, in a survey of 241 industry participants recently carried out by AsianInvestor and Clifford Chance.

Singapore won 26% of the vote, from executives among asset-management companies, service providers, institutional investors and other buy-side organisations, mostly located in Asia-Pacific.

Hong Kong came second with 19%. With the US and Europe in third and fourth respectively, China took fifth place with 7%.

The full survey results appear in the May edition of AsianInvestor magazine.

However, the industry’s view is not so clear-cut.

James Walker, a partner at Clifford Chance in Hong Kong, says Singapore may have enjoyed such a strong lead because it has put in place a welcome licensing regime for products, without sacrificing its commitment to investor protection. Singapore now has far more offshore funds authorised for retail sale than Hong Kong, where new approvals have slowed down since the global financial crisis.

So is everyone headed for the Lion City? Not quite.

We also asked the industry which city is better positioned to serve as the region’s funds hub, and Hong Kong won that one, 59% versus 39% for Singapore (a few also cited Dubai).

What explains this discrepancy? Our follow-up question could shed some light on it. We asked whether the offshore renminbi market gives Hong Kong an edge over Singapore, and 82% said yes.

“The offshore RMB market clearly gives Hong Kong its edge,” says Mark Shipman, a partner at Clifford Chance. “Singapore is preferred as a regulatory environment, but Hong Kong provides a depth of business and market access that wins out. But what we’re hearing from fund managers in this survey is that they are frustrated with Hong Kong, and the government here mustn’t take the industry for granted.”

We asked respondents to rank their three most sought areas of desired regulatory change in Asia. Top of the list, with 51% naming it among their three picks, was ‘how products are sold’. Just behind, with 49% of votes, was ‘fund passports among Asian jurisdictions’.

“The industry likes the idea of a funds passport,” says Walker. He notes there are several streams of conversations now taking place with regard to this idea: one among Southeast Asian countries, a pan-Asia proposal being pushed by Canberra, and bilateral deals such as those between Hong Kong and China.

The partners were less sure how to interpret the call for changing rules around how products are sold (which also featured prominently in a similar survey we conducted last year). It could refer to approval processes, which in many countries have become bogged down; or to fears of another Minibond-style crisis; or to a desire to loosen post-crisis restrictions.

However, both the issues of selling products and fund passports may apply to a final question: Where does the industry expect most new investment products authorised for sale in Asia to be domiciled?

Interestingly, 43% say ‘locally in Asian markets’. That is fewer than the 54% who cited ‘European/Cayman Islands/other offshore centres’ (2% said ‘others’). But the partners at Clifford Chance say this is a big expectation for more Asia-domiciled product, particularly considering the massive trend towards Ucits and other offshore funds.

So the industry wants – or expects to be pushed – to develop more local fund products. It is equally keen to see Asian passports for such products, which would make local products more attractive to develop. And the industry prefers Singapore regulation, but wants access to Hong Kong as the China gateway.

For both Hong Kong and Singapore regulators, this suggests the one that develops the most effective cross-border solutions for regionally domiciled fund products could achieve a lasting advantage.