Asia's Leading Investors: The divergence caused by Covid

2020 proved to be a difficult year for asset owners, be they in Asia or elsewhere. The impact of Covid-19 was especially tough during the early stages of the year, with markets collapsing as the pandemic spread across the world. 

 

And yet, circumstances quite rapidly rebounded as central banks and governments made clear they would put a series of massive policies into place to sustain economies partially closed to contain the spread of the deadly disease.

 

For some asset owners the rapid return of markets proved an ultimate boon, helping them more than overcome previous losses. Others, especially central banks and those reliant on fixed income investments, fared less well. 

 

Our annual list of Asia’s Leading Investors (in previous years called the AI300) bears out some of this. This marks the second year of our revised list of the region’s top asset owners by assets under management (AUM). This year, we have expanded the full list to include 250 overall investors, up from the 150 included in 2020. 

 

The extended list of 250 asset owners possesses a combined AUM of $26 trillion on a converted US dollar basis. The 150 possess the bulk of this; their combined AUM of $25.2 trillion marks an 11.5% increase on the $22.6 trillion of last year. 

 

In addition, the overall AUM of asset owners in the region also continued to rise. Pension funds led the growth, enjoying an overall increase of 19% in their combined AUMs. Official institutions followed, at 18%, while central banks rose by 16% and insurers by 14%. The only investor base to record quite limited growth was sovereign wealth funds; their combined assets only rose 4% over last year.

 

 

STRUGGLING INSTITUTIONS

 

However, delve a little deeper into the statistics, and it becomes evident that this growth in AUM was far from uniform. Indeed, there are several examples of quite notable institutions across the region witnessing quite substantial declines in assets during the tumultuous year of 2020. 

 

Most of the fall was down to the impact on central bank reserves. The institutions have had to take a very assertive role over the past year, slashing interest rates and spending reserves as necessary to safeguard their currencies.

 

That led the AUM of two central banks in particular – Bank of Japan and the Central Bank of Sri Lanka – to drop by an average of 23.1% over the course of the year. 

 

Similarly, while many insurers continued to build their overall AUMs, by dint of smart investing and asset inflows, 14 saw their AUMs suffer an overall drop by an average of 12.4% year-on-year.

 

These falls were particularly pronounced among Indian insurers, seven of which experienced a decline in assets, while six Japanese life insurance companies suffered falls in their AUMs. 

 

In addition, three sovereign wealth funds – the Brunei Investment Agency, Khazanah Nasional of Malaysia and Singapore’s Temasek – also saw a dip in overall AUMs, by a mean of 17.9%.  

 

ORGANISATIONS AND MARKETS

 

One outcome of the asset changes is that overall central banks’ AUM recorded a slight drop as a proportion of total assets from in year’s list, slipping from 33% to 32%. That said, the reserve management organisations still enjoy the largest overall asset total among the top 150 investors. 

 

 

Insurance companies also recorded their first overall AUM drop as a proportion of the list since 2013, with their combined assets sliding from 31% in 2020 to 29.6% this year. Pension funds also dropped from 23% to 21.8%. 

 

In contrast, sovereign wealth funds recorded a slight uptick, from 12% to 13.4% this year, as many of the organisations took advantage of the volatility to add to returns, or at least avoid succumbing to conditions. Meanwhile, official institutions also rose slightly as a proportion of the top 150 institutions’ AUM, from 2% in 2020 to 3.2% this year. 

 

By country, there was relatively little changes in terms of representation among the top 150. Japan remains the most represented country by AUM, accounting for 30.3% of the total, the same level as that of last year. China continues to hold second place, although with 28.2% of this year’s AUM it has risen from the 27.8% it represented last year. 

 

In third place, South Korea slipped just a touch from 9.1% to 9%, while Taiwan saw its representation rise from 7.1% to 7.4% this year. India was the big loser of the top five markets; its AUM representation declined from 6.1% in 2020 to 3.4% this year. 

 

Singapore and Australia also saw smaller declines (6% to 5.9% and 4.2% to 3.9%, respectively), whereas Hong Kong and Malaysia rose a smidgeon (3.8% to 4.2% and 1.7% to 1.8%, respectively). Rounding out the top 10 markets is Thailand, whose AUM slipped from 1.5% to 1.2% over the course of the year.  

 

THE TOP INVESTORS

 

There was little change among the very largest institutions on our annual list. As always, the People’s Bank of China remains by far the largest institution by assets, with $3.22 trillion of AUM. That is 5.21% higher than last year’s total. 

 

Second is the Government Pension Fund of Japan, the world’s biggest pension provider. Its $1.73 trillion of AUM marked an impressive rebound, being 18.44% higher than the same time last year when it was suffering from the onset of the early months of Covid-19. 

 

Bank of Japan also stands in third place at $1.37 trillion, despite its very slight AUM decline. 

The top 10 overall for this year consists of four asset owners hailing from Japan, three from China, one from Korea, one from India, and one from Hong Kong. The only new entrant was China Life, whose AUM rose 28.78% over the course of 12 months to end up on $547.29 billion. That raised it from 14th to ninth place, knocking Central Bank of China of Taiwan down to 11th. 

 

Out of the top 100, the asset owners enjoying the most rapid AUM growth were Bajaj Alliance Life Insurance of India, whose AUM exploded by 75.78% to end up at $14.9 billion, and ZhongAn Online Property and Casualty Insurance registered a growth rate almost as impressive; its $5.43 billion of AUM had expanded by 67.91%, year on year. 

 

On the other end of the scale, Westpac Insurance suffered a woeful drop of 56.12% of its AUM to end up at $2.77 billion, while the Central Bank of Sri Lanka suffered an AUM drop almost as dramatic, with its assets slipping 46.21% to end up at $4.1 billion. 

 

To see the top 150 asset owners, please pick up a hardcopy edition of AsianInvestor magazine. For the complete list of 250 asset owners and accompanying statistics and information, please look to the website of Asset Owner Insights, the research arm of AsianInvestor, which should publish it soon. 

 

THE TOP 20 ASIA PACIFIC ASSET OWNERS, BY AUM