Moving on up

Category: Asia, China, Hong Kong, Japan, Singapore, Vietnam, Global, Asia-Pacific
By Hui Ching-hoo

Change has been a constant among asset managers in the year so far

The Asian fund management industry has seen a hectic six months, spurred in no small part by a multitude of newcomers rolling out their brands in the region. Asia Asset Management takes a snapshot of their activities, including the establishment of regional offices, product launches, and pension diversification, in a bid to gauge their likelihood of success in the market.

Asian expansion

For a number of global asset managers, expansion in Asia has been as a result of buoyant business elsewhere in the region.

This is reflected by British fund manager, Jupiter Asset Management, opening a Hong Kong office in April, in an attempt to attract more investors from across the region.

Jupiter said that the launch was part of a broader strategy to diversify its client base, as it seeks to derive a growing portion of its AUM from international markets. The firm already had a presence in Singapore and Taiwan, but its Hong Kong operation is its first fully-fledged office outside of Europe.

Similarly, New York-based fund consultant Casey, Quirk & Associates LLC opened its first Asia Pacific office in Hong Kong on February 21. This was in response to growing demand for the firm’s advisory services, it says.

Daniel Celeghin, the Casey, Quirk & Associates partner appointed head of the new office in the territory, predicts that Asia Pacific investors will make up a quarter of the new revenue opportunities in the global asset management industry over the next five years.

“That belief is based on Casey Quirk more than doubling in size over the past five years, a development largely driven by the significant growth of our Asia Pacific business,” adds Yariv Itah, Casey, Quirk & Associates’ managing partner.

Mr. Celeghin sees Hong Kong as the ideal base in the region to address this growing demand.

That said, however, Singapore is another Asian asset management hub that foreigner fund managers are looking to tap into. On June 4, Canadian pension manager Caisse de Depot et Placement du Quebec (CDPQ) unveiled plans to inaugurate a regional headquarters in Singapore within the next five years as part of its global expansion plan.

The firm’s chief executive officer, Michael Sabia, says that CDPQ will hire 50 to 60 people as part of these expansion plans.

It currently has a branch in Beijing, while plans to open offices in Mumbai and Sydney are on the drawing board.

New York-based asset manager GoldenTree in June moved into Singapore, hiring Shahriar Saadullah, former head of Asia Pacific for Citigroup’s global markets’ international fund distribution group. In his new role as managing director he will run the company’s business development in the region, reporting to Kathy Sutherland, the firm’s global business development head.

Ms. Sutherland sees this launch as an indication of the firm’s commitment to investors in the region, while demonstrating the growing relevance of GoldenTree product offerings.

Further north, securities and financial services consultancy AlfaSec Advisors announced the opening of its Tokyo office, and the appointment of Kyoichi Murakawa as chief representative, Japan in March.

According to Mr. Murakawa, opening a Tokyo office highlights AlfaSec’s commitment to this strategically important market and, in particular, its growing focus on cross-border investment activity from Japan.

In fact, this is a two-way street. As overseas fund managers have looked to access the land of the rising sun, their Japanese counterparts are just as eager to raise their overseas exposure.

This latter trend explains Nomura Asset Management (Nomura AM) opening an office in Dubai in June with a view to tapping into the vast surplus of oil revenues held by the Middle East’s sovereign wealth funds (SWFs). The firm has appointed Tarek Fadlallah, a veteran of Nomura in the Middle East, as chief executive officer.

Nomura AM said the firm would use its platform in the Gulf emirate to promote and market its international funds to SWFs, pensions and other institutions.

Elsewhere, global asset management and financial giants have likewise strived to maximise their penetration in Asia’s promising emerging markets.

For one, State Street Corporation opened an office in Shanghai in January, which is tasked with providing alternative investment solutions to support the firm’s strategic hedge fund clients as they, in turn, expand their business in China. The setup will also support client and business development initiatives in China for State Street’s alternative investment solutions business in private equity and real estate assets.

A short while later, Northern Trust launched a Malaysia representative office in support of its current institutional clients, as well as developing its local business. Chief Representative Ariani Rustam, a former chief executive in risk management, operations, and quantitative analytics with Malaysia’s central bank, leads the office.

Pensions investment

With many plain vanilla assets encountering snags, a number of Asian pensions have picked up the pace in terms of diversifying their portfolios into alternative assets.

In March, Japan’s Government Pension Investment Fund (GPIF) launched its maiden investment in alternatives by partnering with the Development Bank of Japan and Canada’s Ontario Municipal Employment Retirement System. That fund aims to invest in the infrastructure and energy sectors.

To boost its in-house capabilities, GPIF has hired Noriko Hayashi, a veteran private equity portfolio manager at Sony Life in Japan. Ms. Hayashi has a long experience of managing global portfolios.

Meanwhile Taiwan’s Labor Pension Fund defined benefit old scheme has become the first Asian pension fund to dabble in listed real assets as evidenced in its appointment of four external asset managers: AMP Capital, Principal, Cohen & Steers, and Lazard. These firms undertook its REIT and listed infrastructure mandates in April.

The appointments were aided by the restructuring of the Bureau of Labor Funds (BoLF) in February through which the two supervisory bodies – the Labor Pension Fund Supervisory Committee and Bureau of Labor Insurance – merged. As a result of this transaction, the new body BoLF now oversees the island’s US$86 billion labour retirement assets.

Product launches

At the same time, asset managers have stepped up to push the envelope on product innovation, especially for ETFs.

VietFund Management (VFM) unveiled plans for the first Vietnamese domestic ETF, the VFMVN30 ETF, in July. The VFMVN30 ETF will be managed by the fund’s authorised participants, which include Ho Chi Minh Securities Corporation and Bao Viet Securities Company.

The VFMVN30 ETF will track the performance of the VN30 Index, comprising 30 companies with the highest market cap and liquidity on the Ho Chi Minh Stock Exchange. From a portfolio perspective, at least 95% of the fund’s assets will be invested in companies listed on the VN30.

On the RQFII market, China Universal Asset Management (Hong Kong) launched its first sector-themed RQFII ETF products, the C-Shares CSI Consumer Staples Index ETF and C-Shares CSI Healthcare Index ETF, in May.

These two products track the performance of the CSI Consumer Staples Index and the CSI Healthcare Index using a full replication strategy. The former index consists of A-share stocks in the agriculture, and food and beverage manufacturing industries, as well as retail stocks in the CSI 800 Index. The latter index is made up of Chinese patented medicine, medical equipment and medical products’ securities.

Also in May, Deutsche Asset & Wealth Management rolled out the first small cap RQFII ETF. The db X-trackers Harvest CSI 500 China A-shares Small Cap Fund is listed on the NYSE Arca. It tracks the performance of small cap equities in Shanghai and Shenzhen. The ETF, launched alongside Chinese asset manager Harvest Global Investments, provides investors with exposure to CSI 500 A-shares.

In June, Malaysia’s RHB Asset Management launched Hong Kong’s first Islamic investment fund, RHB-OSK Islamic Regional Balanced Fund, which invests between 40% and 60% of its net asset value (NAV) in equities that comply with Islamic financial principles, as well as non-equity, Shariah-compliant assets such as sukuk (Islamic bonds), money market instruments and deposits.

Finally, Manulife Asset Management (Taiwan) rolled out the first multi-asset fund of funds in the island’s history on May 28. The Manulife Global Dynamic Asset Allocation Fund employs a flexible asset allocation strategy with the intent of investing primarily in global equity and bond sub-funds.

Personnel movements

Meanwhile, the ‘musical chairs’ game has continued among executives at the region’s asset management firms. Some key personnel movements over the past six months include:

In May, Deutsche Bank appointed Jens Ruebbert as its new chief country officer and head of global transaction banking for Vietnam. Mr. Ruebbert previously worked as managing director/chief operating officer at Deutsche Bank (China).

Around the same time, HSBC Global Asset Management announced that its chief executive officer for the bank’s asset management division in Brazil and regional head of Latin America, Pedro Bastos, would replace Joanna Munro in taking charge of the firm’s operations in Hong Kong and Asia-Pacific. Ms. Munro will become global head of fiduciary governance and a member of the global executive committee.

Also in May, Eastspring Investments, the asset management arm of Prudential Corporation Asia, named Andy Yang head of insurance relationships. Mr. Yang will be responsible for all aspects of the firm’s relationships with Prudential’s insurance business across Asia, reporting to deputy chief executive officer Michele Bang.

Also, Man-Yeon Choi was appointed BlackRock country head for Korea effective from June 3. His responsibilities will include overseeing and leading all of BlackRock’s Korean business interests, while at the same time driving its local market strategy across all client groups.