AI300: Revealing Asia’s asset owner heavyweights

The waxing economic fortunes of China and legacy strength of Japan continue to dominate the region’s largest institutional investors. Asset owners from the two countries encompassed the largest portion of assets under management (AUM) in AsianInvestor’s latest AI300 list of the top 300 Asia Pacific asset owners. 

Overall the news remains positive for the region’s biggest investors, and the fund houses that service them: assets are continuing to grow. The top 300 asset owners boast a combined AUM of $39.71 trillion this year, a 7.57% increase on the $36.71 trillion recorded in last year’s AI300. 

Japan still enjoys the heaviest representation by number of institutions, courtesy of both its size as the world’s third-largest economy and the fact that its aging populace have been saving for years in order to fund their retirements. There are 53 asset owners from the nation in this year’s AI300, up one from 2017. 

However, its greying population is drawing on the assets they have spent decades accumulating, and its economy remains slow growing. That helps to explain why combined assets from Japanese institutional investors stand at $10.46 trillion, down a little from last year’s $10.68 trillion. On average, the AUM of its institutions fell by 2.59%.

China is Asia Pacific’s second-most represented country by number of institutions, and its ongoing economic growth has ensured that they boast the most combined AUM. All-told, 36 asset owners from the country are included on this list this year, a smidgeon down on the 38 of 2017. 

Their asset bases are growing fast; the country’s combined AUM is $16.45 trillion, 12.65% higher than last year. More impressively, its individual institutions grew their AUM by 22.45% on average; a massive jump. It was by far the biggest geographical growth rate in the region. 

The country’s strength is in large part down to its financial institutions. People’s Bank of China continues to reign as the largest asset owner in the region, with $3.14 trillion in AUM.

It’s followed by the country’s leading banks, all of which have AUMs of over $1 trillion, barring Postal Savings Bank of China, which has $841.6 billion. China Investment Corporation is the largest non-bank; the sovereign wealth fund boasts AUM of $745.28 billion. 

Elsewhere, South Korea’s $2.41 trillion combined AUM was 12.76% higher than last year, a reflection of the increasing desire of its institutional investors to buy offshore assets that yield decent returns. Australia’s average asset owner growth of 16.62% to a combined $1.78 trillion was not too shabby either, courtesy of smart investing by its banks and superannuation funds. 

India, the region’s other major economy, saw its total AUM rise by 14.33% to $1.76 trillion, with its asset owners recording 11.67% growth on average.  

ASSET OWNER TYPE

Divide the list by asset owner type, and commercial banks continue to comfortably rank as the largest group. The region’s banks boasted a combined AUM of $16.46 trillion, 10.87% higher than last year. The assets of these lenders increased by 11.86% on average, bolstered by strong economies.  

The outcome for insurance companies was more mixed. While their combined AUM stood at $6.75 trillion, this marked a year-on-year AUM increase of just 5.11%, a relatively low rate of growth. 

This can be explained by the fact Japanese insurers remain the region’s largest; six of the top 10 life insurance companies on the AI300 hailed from the country. Of these, Japan Post Insurance and Nippon Life Insurance were the region’s largest two companies, with AUM of $550.62 billion and $486.93 billion, respectively.

The large AUM and slow growth of these players contrasted with that of many others; individual insurers saw AUM expand by 11.96% on average. Japan’s Government Pension Investment Fund (GPIF) remains the region’s biggest player, with $1.39 trillion AUM as of September last year. Korea’s National Pension Service ranks a distant second, its $590.23 billion making it less than half the size. 

The region’s pension funds continue to grow at a decent clip. All-told they accounted for AUM of $4.69 trillion in this year’s list. While this combined figure was 8.01% higher than in 2017, the region’s pension funds enjoyed an average AUM rise of 12.48% on average. 

It was not a particularly good year for the sovereign wealth fund category. They recorded a combined $2.71 trillion in assets, a rise of just 2.43% compared to 2017. China’s CIC was the biggest player, with AUM of $745.28 billion, while the Hong Kong Monetary Authority’s investment portfolio accounted for $519.19 billion. 

The AUM of official institutions, a catch-all category that typically includes development banks and state savings funds or post banks, rose to $1.69 trillion this year, 12.05% more than in 2017. More impressively, the average growth of these organisations was 21.51%. 

The signs of our survey underline the fact that Chinese institutions will continue to gain strength, even as those of Japan slowly fade, under the weight of the country’s demographics. 

Overall, asset growth for institutional investors looked good, courtesy of the region’s generally expanding economies. Asia’s leading investors will only continue to gain firepower in the months and years to come. 

Look out for more detailed analysis of the AI300 results in the coming days.

The full AI300 list is published in the June/July issue of AsianInvestor magazine.