The investment management industry in Asia Pacific has grown and developed at an impressive pace in recent years though the regulatory environment of many jurisdictions poses a challenge. Successful Asian investment managers have met these challenges with aplomb, responding quickly to the dynamics of the market. Asia Pacific?s healthy demographic and economic fundamentals, rising level of a wealthy middle class and the limited existing penetration of structured or managed products in many markets has paved the way for continued growth, said a recent survey done by KPMG.
Titled State of the Investment Management Industry in Asia Pacific, the survey said that global investment trends are exerting their influence on the Asia Pacific region. Many foreign mutual firms recognise the need for local presence and have personnel or distribution operations in the region. The Asia Pacific region also highlights the global trend of polarisation of the market between large branded fund managers and niche institutional managers, such as hedge funds.
In order to sustain this development, pension reforms and continued liberalisation of financial markets need to be followed rigorously. Prevailing regulatory constraints such as the imposition of currency and capital controls, quotas or qualifying criteria for foreign institutional investors, conflicts or obligations arising from a multiplicity of regulatory bodies and the obligation to form a joint venture with a local firm pose major hurdles to companies when entering the Asia Pacific markets. Challenges existing in other areas include staff retention, distribution, communication and technology, the survey pointed out.
Naresh Makhijani, executive director, KPMG India said, ?Though Asia Pacific accounts for more than 60% of the world?s 6.5 billion population, it remains underdeveloped in terms of penetration of investment management services. Nevertheless, there is going to be a sea change in this regard as ageing populations and burgeoning middle class incomes help drive pension market reforms in many parts of the region.?
Additionally, regional fragmentation is an unavoidable reality in the business environment across Asia Pacific and the diversity of culture and languages has very real and specific implications for companies seeking to develop in different markets in the region as there is no Asian equivalent to the European supra-national reform process to develop standardisation across the region, he said.
