Major money managers in five Asian countries, excluding Japan, invested nearly $185 billion in Asia, including Japan, as of Sept. 30, according to a survey by RCP & Partners S.A., Geneva.
That $185 billion equals about 85% of the total assets under management at the 100 firms with the largest amounts invested in Asia, RCP estimates. While the total assets represent money from retail and institutional clients, the majority comes from institutional clients; not more than 10% is from retail customers.
The survey, Investment Manager Report Asian Top 100 Managers (ex-Japan), is RCP's first comprehensive study of Asian managers' regional investments. RCP undertook the survey through its Hong Kong office with assistance from Asian offices of KPMG Peat Marwick and Watson Wyatt Consultants and The WM Co., Edinburgh. (See chart on pages 16 and 18.)
The survey covered nearly 200 managers in Hong Kong, Malaysia, Singapore, Taiwan and Thailand. According to Robert Pouliot, managing partner of RCP, the universe represents more than three-fourths of all investment managers in those countries.
RCP found that, among the top 100 asset managers surveyed, two-thirds have their regional center in either Hong Kong or Singapore. About one-third have a parent company based outside of the region.
In terms of location, the survey found that, as RCP reported, "Hong Kong is still the investment management hub of the region .*.*. However, it is gradually losing its share of the .*.*. regional cake to the subsidiaries of its own houses, as well as to the newcomers, both local and international, in the other four centers."
Specifically, RCP found there were 10 so-called "regional firms" among the Top 100 that have more than one management center in the five countries studied. Of the remaining 90 firms, the study showed Hong Kong was home to 39 managers, while Singapore had 18, Taiwan, 15, Thailand, 10 and Malaysia, eight.
RCP officials expressed surprise at the extent of the industry's development in Taiwan and Thailand. In Taiwan, the money management industry "hardly existed five years ago," said the RCP report. "More stunning is the fact that most assets under management (come from) internally sourced financial institutions (with) no significant contribution from local" retirement funds.
In Thailand, the industry's growth has been continuing, despite the decline of the stock market there in 1996-1997.
Among specific managers, the survey underscored the strong position of just a few regional managers. While the top 25% handle 75% of the $185 billion of Asian investments, the bottom 25% manage just more than 2%.
What's more, the top 10 managers in the ranking have nearly $100 billion invested in Asia - 54% of the total amount invested in the region by all 100 firms.
Significantly, about 50% of the $185 billion of regional investments come from investors outside of the five countries studied, Mr. Pouliot estimated.
According to Mr. Pouliot, many of Asia's wealthiest families so far have had their much of their assets tied up in their businesses, with less available for stock markets. Foreigners, on the other hand, would find equity investing an easier way to capitalize on the region's economic boom. But this situation will be changing, Mr. Pouliot believes.
"Because of growing wealth in the region, more and more local people (already) are investing in equity markets," which increases assets under management for Asian firms. That trend will gain steam in coming years and benefit investors worldwide, he said.As he explained, local-sourced investments should "lend greater stability to these volatile markets," which have sometimes been rocked by repatriation of assets from foreign investors. Investors outside the region have been known to pull money from "exotic markets" when the Dow Jones industrial average of the U.S. market goes down, Mr. Pouliot said.
Among other factors that should benefit managers in the region: expected growth of regional pension assets, and the fact that more of these assets now in the hands of government entities will be given to private sector managers.
While combined pension assets in Hong Kong, Singapore, Malaysia, Thailand and Taiwan now total some $123 billion, RCP estimates they could exceed $200 billion by 2000. Moreover, of that $123 billion, about $80 billion is now handled in-house by central provident funds. Gradually, more of this money is expected to be handed to private investment managers, providing a "major source of growth for that industry," he predicted.
