APAC players identify gaps in investment research
Investment research plays a central role in the Asia Pacfic wealth managagement market, but firms in Hong Kong and Singapore are looking increasingly further afield to boost their coverage, writes Karl von Bezing.
Scorpio Partnership recently completed the Asia Pacific (APAC) component of its broader research into the wealth management market’s use of investment research. Specifically we focused on 47 firms in the three core markets that form the research hubs for the wider APAC wealth management community, namely Singapore, Hong Kong and Taiwan.
Interestingly, despite the core concentration of APAC investment research skills and personnel in these markets, 59 per cent of respondents identified gaps in their existing research coverage. Asset class coverage was highlighted as the area most in need of improvement, underlining the move to multi asset class, and was most acute in the Singapore and Hong Kong market.
Weaknesses within geographic coverage centred on the emerging markets primarily and in particular the smaller APAC markets. This wide range of needs relates to the diversity of the client base and the evolution of knowledge and interest from the domestic market into wider geographies.
In terms of geographical coverage the greatest demand for wider coverage was found in Hong Kong. Wealth managers are confident in their internal capabilities to provide coverage of Asian equities and fixed income but require more support in developing a global view.
Similarly, Singapore is looking increasingly outwards for support with demand increasing for European, Latin American and US equity and fixed income coverage.
Interestingly, some wealth managers recognised the fact that limitations placed on them in terms of head count or cost constraints led to them being competent across multiple areas but specialists in none. Addressing this problem has led these firms to increasingly rely on a combination of internal and external research, or in some cases wholly on external research where the in-house skills to repurpose the external research did not exist.
Therefore, given the current state of affairs, the APAC investment research model is undergoing a period of flux. While some firms will remain reliant on biased sell-side research,w forward thinking wealth managers are foregrounding their investment research capabilities or access to external providers.
The signature client proposition is therefore complimented through the use of a variety of tools and resources. We believe the latter will drive higher sales revenue in the long-term and cultivate a more sustainable business model for the current and next-generation of APAC wealth consumers.
Karl von Bezing is a director at wealth management strategy think-tank Scorpio Partnership.
