The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
First, expect the financial world to become more local. Investors will favour local, home-country stocks over international investments as emotion overrides reason. Home is where the heart is and we should expect investors to feel safer in their own backyards for a while. They will feel most confident holding domestic stocks where their governments will protect both them and their institutions. And these institutions and those who trade for them are also likely to prefer local counterparties where they are available.
Second, financial industries have become political. The public is looking to governments to act and politicians have shown they will not let the electorate down. We should remember that governments are local, not international. While information and intelligence are shared internationally, decisions are made at the country level.
Third, complexity is out and simplicity is back in. Investors, firms and regulators will have a newfound desire to understand fully what they are buying and will favour those investments they can adequately control, understand and monitor. For many financial instruments, underlying exposures and leverage have moved beyond the understanding of those who bought them and also those who had the responsibility of governing the institutions who traded and marketed them. Firms will now become more focused on what they can do well and what they can adequately control and monitor.
Fourth, models are out and people are back in. Investors will shift away from models û quantitative or otherwise û and swing back to human beings, where their level of understanding is greater. Many such models rely on past relationships between securities, markets and asset classes. Theory and practice can be strange bedfellows as many investors are now finding out. Market participants have learned now how leverage has overridden historical correlations so that everything now seems one-directional.
Fifth, innovation is out and experience is back in. Funds will flow to those with experience in the traditional practices of traditional markets and investors will be wary of anything new. This was already a trend emerging this year but last weekÆs events have cast it in stone û at least for the foreseeable future. Smart will be replaced by sensible, while trust and experience will be at a premium.
Sixth, transparency trumps opacity. Investors will demand transparency from the firms managing their money and in the products that they market.
Seventh, oversight will be as valuable as insight. Compliance will become even more critical in firms and those companies that have relegated this function will need to redress the balance. Oversight will become as important as insight in the new world of investing.
Sunsuper and QSuper appoints CIO for combined entity; State Street appoints heads of HK and Taiwan; Nothern Trust rebuilds Apac team; Manulife IM names emerging markets fixed income CIO; RBC Wealth Management hires four into HK; Lombard Odier hires two senior equity managers; Allianz Global Investors appoints Asia hand as equity CIO; and more.
Investors from China and the US are expected to continue buying assets in each other’s markets despite the blacklist of Chinese firms with military and surveillance ties.
Stronger government actions are needed to meet the Paris Agreement goal of limiting global temperature rise to 1.5 degrees, investors such as Hesta and CDPQ signed in a statement.
AsianInvestor explains why we chose the winners of the second half of our 2021 fund manager winners, by major local markets.