Asset Management

Asia has become the fastest growing asset management region in the world, and it is likely to remain so in the foreseeable future.

The leading asset management countries in Asia are Hong Kong , Singapore , South Korea , and Taiwan . In these countries savings have grown by about 8% per annum over the last 20 years. Similarly, assets under management in these countries have grown by more than 12% per annum over the last 10 years. By the end of 2003 retail assets under management in Asia (ex Japan ) were estimated at $370bn. Singapore reported 35% growth of assets under management ($215bn) in 2003.

The Asian asset management sector will continue to grow in the future. Asia as a whole is expected to see substantial growth over the next ten years. Mutual fund assets alone are expected to compound at 14% per annum through 2008, finishing with $700bn under management. Public and Private pensions also represent an excellent potential growth area for asset management in Asia . Pension schemes in Hong Kong , Japan , China , Korea , Taiwan , Thailand and Malaysia together hold over $1tn. China will be a driving force behind growth as the Chinese economy continues to heat up and China moves more towards a market economy. Similarly, as China begins to comply with their WTO commitments there will be a further liberalization of the asset management market and an influx of potential investors. Even if current expectations of Asian economic growth do not materialize Asia is still a market ripe for asset management potential. Asians typically hold around 16% of their assets in cash, a figure far above other areas of the world.

Asset management in Asia is not without its risks. Asia has had problems with transaction transparency and corporate governance. There are also issues concerning political instability in the area and concerns over an outbreak of bird flu or some other SARs type pandemic. Scandals and concerns over market stability have created contempt and led to distrust by investors.

Asset management in Asia has incredible potential however there are still many hurdles that must be overcome. Market participants can not ignore the Asian markets, but they should be cautious not to overexpose themselves.