Analysis
A pioneering journey
The success of Stock Connect has revolutionized market access for cross-border investments since its launch a decade ago. As Hong Kong's financial market seeks its next engine of growth, Stock Connect serves as an inspiration for the potential development of a Hong Kong-Middle East Corridor.
New era for private funds in China
China is set to overhaul its US$2.9 trillion private funds sector with new rules to strengthen governance and promote innovation. The country’s under-developed private market can play a significant role to help reset the world’s second largest economy.
Time for an Asian Monetary Fund?
The idea of creating an Asian Monetary Fund is resurrected as nations reconsider the downsides of over-reliance on the US dollar.
Crypto’s future in the balance
The crypto industry saw almost US$1.5 trillion of its market value wiped out in 2022, with a variety of weaknesses being exposed. The industry will need to evolve to be sustainable, and regulation will play a key role in facilitating this evolution.
India coming to the fore
Solid economic fundamentals and growth policies make India a compelling investment destination. Its attractive growth story has increasingly prompted foreign investors to upgrade Indian stocks into a dedicated allocation in their emerging-market investment portfolios.
Asia Pacific leads digital currency explorations
The Asia Pacific region is at the forefront of exploring central bank digital currencies. Not only major economies in the region are in advanced explorations, but emerging economies and low-income nations are also showing rising interest. However, only two countries have indicated that they are very likely to issue a retail CBDC in the near term.
Changing work attitudes
The prolonged Covid-19 pandemic has prompted many people to rethink their lives, values and priorities, thus giving rise to social phenomenon such as “Great Resignation”, “Great Resuffle”, “Lying Flat” and “Quiet Quitting”. The changing dynamics of employees’ attitude towards work present a challenge as well as an opportunity to businesses.
Moving to T+1 settlement
Shortening the securities settlement cycle to T+1 will have a profound impact on global financial markets, helping to cut risk in volatile markets. In the Asia Pacific, India has begun T+1 implementation with a phased approach.
New Zealand punches above its weight
New Zealand’s asset management industry has been punching above its weight in collaboration with the government despite its remote geographical location and its small population of just over five million. One of its firms recently became the first to be approved to distribute funds across borders under the Asia Region Funds Passport scheme.
The changing face of Chinese investors
Chinese mutual fund investors are increasingly displaying stronger confidence and maturity in investing. Female participation has increased, incomes are higher, and investors are more educated, savvier at online and digital communication, and allocating more income into investment.
Competition in China’s custody market stiffens
China’s custodian banks have been on a roll over the past two decades. But now their margins are being squeezed and new challengers are appearing on multiple fronts. Apart from competition from within, custodian banks are also seeing their market share being eroded by securities companies in the mutual fund and private fund sectors. Foreign banks are also entering the scene.
Evolution of the securities services industry
The custodian industry is highly concentrated today, with 60% of the assets held by the top five custodians, the result of several decades of growth and consolidation. M&A activities have played a major role in shaping the industry’s landscape today; a new wave of M&A activities will be triggered as the industry goes into the digital age.
China’s bank wealth management business comes out of the shadows
China’s 25.8 trillion RMB wealth management sector represents the biggest pool of managed assets in China, larger than the 23 trillion RMB mutual fund market. The business is entering a new phase of development after a sweeping regulatory overhaul three years ago. The government has set up a new licence for the sector as well as allowing the entry of foreign competition to encourage players to break away from dubious practices in the past and to innovate and improve their services. The The long-awaited Wealth Management Connect scheme for the Greater Bay Area recently announced can be another booster.
Central bank digital currencies
CBDCs are actively researched on by 56 central banks representing 90% of the global economy. Apart from China which is progressing with its e-CNY project at high speed, 14 other countries are in the pilot stage of their CBDCs and preparing a possible full launch. The BIS anticipates that one-fifth of the world’s population may be using CBDCs in three years.
ESG funds ready for take off in China
China has seen a significant uptake of ESG funds over the past two years even though it is a late starter to the game. Its blueprint for national development is pushing ESG into the mainstream for both institutional and retail investors. However, the country’s ESG journey will be on its own terms, based on its own needs and characteristics.
The rise of digital investors
A generation of tech savvy digital investors is on rapid rise with the democratisation of investing. Many asset classes are now available for small amounts of investment. The digitalisation of financial services allows investors to access global capital markets around the clock.
Digital platforms transform China’s fund distribution landscape
Digital wealth platforms powered by big data analytics and artificial intelligence are rocking China’s fund distribution and wealth management market. They have rapidly developed into fund-selling powerhouses. Together with the push for investment advisory services, they have transformed China’s fund distribution landscape by bringing some much-needed diversification and discipline to the industry.
Tokyo’s bid to become a global financial centre
Japan has implemented a package of incentives to lure foreign fund houses to move to Tokyo, taking a big step forward on its plan to replace Hong Kong as Asia’s premier international financial centre. Despite these initiatives and Japan’s overall economic and other strengths, there are some intrinsic shortcomings that work against its plan.
Asia Region Funds Passport: a long way to go
More than a decade on, the opportunities behind the Asia Region Funds Passport remain an aspiration.
Front-to-back outsourcing: the third wave
Front-to-back outsourcing has become a new battleground for securities services providers in addressing the evolving needs of asset managers. Demand for fast and accurate data is driving outsourcing of front-to-back office operations.