The ASEAN passport and 5 other things that asset managers should know about Asia

An Asian version of UCITS is on its way, says Sally Wong, Chief Executive Officer of the Hong Kong Investment Funds Association, speaking at the ALFI Global Distribution Conference in Luxembourg yesterday.

The Association of Southeast Asian or ASEAN nations – Brunei, Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Thailand and Vietnam – are discussing a proposal that would allow an investment fund registered in one country to be sold in the others. Wong believes that they will reach an agreement within the next 2 years.

ASEAN passport funds could prove competition for European UCITS funds, which have gained considerable acceptance in the region. However, their impact could be limited since some of the largest markets, such as Hong Kong, would not be signatories to the mutual recognition framework.

Wong was speaking on a panel titled “The Asian opportunity – Where do we stand and what can we expect?” She and her fellow panelists, from BNP Paribas, Dechert, PwC, Standard Chartered Bank and UBS Global Asset Management, agreed that asset managers must pay close attention to developments in Asia. Here are 5 facts that they highlighted:

  1. Indonesia has the world’s second-fastest growing economy, after China. With its large population (#4 in the world), Indonesia represents a potentially huge market for asset managers.
  2. China is keen to internationalize its currency, the renminbi , and to see it become a world reserve currency. Asset managers must find ways to capitalize on this trend, perhaps by establishing renminbi share classes.
  3. Some 300 million housing units will need to be built in the continent to accommodate the massive and continuing population from rural to urban areas. That’s enough to house everyone in Europe.
  4. Asia is 48 separate countries – not a single market. A customized approach is required.
  5. Penetration of mutual funds in Japan is low, with only 4% of households owning a fund. There is tremendous room for growth in the market.

 

 



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