Stars shine bright despite inflationary pressure and threats of stagflation

When it comes to the global pandemic it seems we’re not out of the woods yet. Two years ago, few could have foreseen the ongoing impact of the Covid-19 induced crisis on economies, on markets and indeed on our daily existence. Fewer still could have predicted Russia’s invasion of Ukraine, leading to rising oil prices, and the effect of record inflation on global markets and society. This time last year we were seeing light at the end of the tunnel, with vaccine rollouts gathering momentum and travel bubbles forming. Today, uncertainty is as dominant as ever. But in the words made famous in second world war Britain, we “keep calm and carry on”. 

To be sure, asset managers globally are continuing on their ESG journey. Some have made good progress, and Asia Asset Management recognises their commitment and achievements in this year’s Best of the Best Awards. However, the global fund management industry continues to face a number of headwinds. The Ukraine crisis has cast a shadow on the issue of energy and food security, which will no doubt impact the transition away from fossil fuels. And as we face some of the highest inflationary figures of the past decades, and possible stagflation, institutional investors, as ever, are rising to the challenge, readying themselves for their next move on the back of those of the world’s Central Banks. 

But with new challenges come opportunities, not least in terms of how managers are moving forward with their digitalisation strategies. As the AI revolution continues to evolve and the transition from the Old Economy to the New Economy takes hold we will continue to look to policy makers for direction. Digital currencies remain a hot button topic, as central bank digital currencies (CBDCs) make more headway towards becoming a reality. 

What is clear is that asset owners are allocating more to alternatives in their search for higher yields, and this looks set to continue at least in the medium to long-term as more funds are moved away from traditional asset classes. For now, in this inflationary environment against the backdrop of geopolitical tensions, it makes perfect sense that investors would look to this space for comfort. 

As we move forward into 2022, we can look back with satisfaction on the progress the industry has made in the past year, despite the extraordinary circumstances of the time. To those who have achieved outstanding success, our heartiest congratulations to all of you. 

Tan Lee Hock
Founder and Publisher
Asia Asset Management
May 2022