Unlocking Asia is no walk in the park

Concern is growing globally about faltering Chinese growth, with factory output slowing. Previous assumptions that consumers in the Eastern economies – led by China – would be able to spend the rest of the world out of recession are increasingly being called into question.

Beijing officials have begun a go-slow process for approvals of new investment projects. Property speculation is also being curbed by the mandarins, amidst worries that this could lead to widespread suffering in the construction industry.

But Beijing’s finest are quite rightly worried about overheating. The Chinese generally take a much longer-term perspective than Western counterparts.

When necessary, they know how to make currency realignments and interest rate adjustments. These measures of calibration are also being applied in Thailand and India.

Despite similar slowdowns in Taiwan, South Korea and India, there are clear opportunities for manufacturers and distributors of mutual funds. Taiwan has become a particularly competitive market place, with foreign providers of investment products dramatically grabbing market share from domestic institutions, since the introduction of new regulations in 2006.

Outside manufacturers have been seizing the opportunity to access the 23m-strong, densely populated economy, via distribution through ‘master agents’, which can be domestic asset management companies. This allows foreigners to avoid the expense of setting up their own local fund operations.

India is a very different story, because there are stringent limits on investments into foreign vehicles, restricting diversification. Rather than opening up to foreign players, Indian asset houses are taking advantage of their local monopoly, and also pushing their tentacles into other markets.

While this is also the case further afield in Europe, Indian institutions such as Kotak Mahindra are stepping up operations in both Singapore and Dubai. Other domestic players such as Reliance Capital may not be too far behind in their development plans.

Making money from distribution of products in Hong Kong and China has never been as easy as it sounds, with Chinese banks still ruling the roost. All the big foreign houses are entering into partnerships, but there are many problems surrounding these. Even Schroders, which has seen performance soaring well above most competitors, struggles to sell to the wholesale market, although the institutional story is often brighter.

Our thanks go to those who attended the Asian Investment Series of conferences over the past few months. these events, supported by PWM Asia, FT Mandate and FTfm, were held in five cities – Kuala Lumpur, Seoul, Hong Kong, Taipei and Singapore – and featured industry experts from across the region. Discussions focused on the key drivers shaping Asia’s investment landscape and highlighted portfolio construction strategies and asset allocation techniques.