AsianInvestor Magazine

Issue: June 2015

Defining moment
In my first editor’s letter for AsianInvestor, back in January 2013, I penned a piece on Hong Kong-China mutual funds recognition entitled “A game we need rules for”. Alexa Lam, the then deputy CEO of Hong Kong’s Securities and Futures Commission, had just unveiled an introductory framework for the cross-border scheme, which led to much excitement and no few questions.
Lam has since retired (see AsianInvestor’s April 2015 issue), but on May 22 at 4.25pm I received a joint regulatory statement announcing the scheme’s July 1 launch day. It came both as a surprise – I had expected authorities to make HK-Shenzhen Stock Connect operational first – and as a relief, since I had grown tired of incorrectly predicting its arrival. Overall it will have taken five times longer to implement the scheme than HK-Shanghai Stock Connect. Perhaps it was five times more complicated, or a fifth as important to authorities in Beijing?
There’s an interesting early question over who stands to benefit more from mutual recognition: global managers or their Chinese peers (see page 9). I side firmly with the former, on the grounds that China’s fledging savings system has so much more room to develop and is crying out for investment diversification. It’s a more compelling argument. Just consider the size of China’s middle class.
But to my mind this is a side issue, since both sides stand to benefit in advance of China opening up its capital markets more fully. Rather, what underpins the importance of the scheme is how it changes Hong Kong’s funds industry. Hitherto it has been reliant on distribution of Ucits funds, underlining the city’s great strength: being unabashedly open and international.
However, the advance of Ucits did little to foster the development of the domestic industry. Yet now, with the lure of China, what was a steady trickle of fund domiciling stands to turn into a flood. This will attract more global firms to base themselves in Hong Kong, bringing with them fund manufacturers and portfolio managers and ensuring more work for service providers in the city.
It stands to be transformational, both for Hong Kong and more broadly for Asia as the era of fund passporting gathers speed and authorities become more cognisant of the potential of domestic asset management industries to drive economic activity and growth. Simply, it’s a defining moment for the region.
On a separate note, it was a privilege once again to host the industry at our 14th annual awards ceremony (see page 40). This was the first time we have combined our service provider and investment management ceremonies into one evening, to great success. We received more applications this year than ever before, and the standard of entries was the highest I have known. If this is any indication, Asia’s asset management industry is in very rude health.

Leigh Powell,

This Month
On the move

4    AGI unveils succession plan; Citi replaces
      Bird as Asia chief; BNPP creates new wealth role; Old Mutual appoints SE Asia head

6    Regulatory Analysis
      Court case tipped for big impact on hedge funds

7    Regulatory Roundup
      Korea plans fund reform; Singaporean investors given access to derivatives; extra vetting for Shanghai FTZ

8    Regulation News
      CSRC clears Stock Connect roadblock; jockeying starts over Mutual Recognition

10  Data Centre
      To mark AsianInvestor’s 15th anniversary Clifford Chance drafts a timeline of key funds industry developments

12   Asset owners
       The Generation Game
       How wealthy families often struggle with the transition of control between generations

18   Q&A: Daisuke Hamaguchi, CIO, Pension Fund Association  

20   AsianInvestor’s Asian Investment Summit:
       Need to align institutional boards and stakeholders to a long-term approach

22   News: Korea’s GEPS plans GE mandates; oppportunity for foreign insurers in China; call for diversity in family-office management

24   Distributors
       Trailer fees’ dirty secret
       What effect would an RDR-type ban on trailer fees have on Asian distributors?

28   Q&A: Edmund Yun, executive director for investment, BMO Private Bank

30   News: Fintech key to industry future; robo-advisors forecast for malfunction; Xiaomi launches online MMF; MPF tipped for shakeout

32   Fund Managers  
       Clutching at Straws
       Valuations and uncertainties over economic profit drivers undermine the appeal of US equities in the near term

40   Asset Management Awards
       AsianInvestor explains the reasons behind the winners in our service provider and investment management categories, as well as our marquee awards. Plus photos at the dinner

66   Efficient expansion
       Interview with Jonathan Mo, chief operating officer of Value Partners

68   Art of Asset Management     
       CEOs say Asian asset owners are getting more sophisticated, and are giving out bigger tickets

69   Women in Asset Management
       Examining equality in Asia

70   News: Vanguard offers S&P500 ETF in HK; Jupiter sets out retail plan; JP Morgan AM mulls China entry; Diam eyes Asia fund distribution

72   Bookend
       The Greening of Asia: The business case for solving Asia’s environmental emergency by Mark Clifford, reviewed by Jame DiBiasio

Quick Poll

Which funds industry development is most pressing?

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Cross-border distribution
Investor education
Fee structures for active management
Easier access to retail funds
Stricter corporate governance codes
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June 2015 Magazine
AsianInvestor Magazine

What's in this issue

Inside Asia's generational handover
The dirty secret of trailer fees
US fund managers clutch at straws
Asset Management Awards in full