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Cheers to a New Era: The Development of Singapore as an ASEAN Asset Management Hub

July 26, 2018 • SPECIAL FEATURES, In-depth, Global Capital Markets

Singapore is a great place for investors because of the country’s good legal and political environment. Like Luxembourg, it has a stable political and social environment and a strong economy and can regulate its investors in a responsive and experienced manner. However, in Asian countries, the differences are distinct economically – from the GDP per capita in Singapore being more than 50 times greater than some of its neighbouring states, to the vast size of Indonesia’s growing middle class and economic output, and the double digit growth of Philippines and Myanmar.

 

After news broke out that Singapore plans to unveil their country as an ASEAN Asset Management Hub, investors and entrepreneurs are rampant on starting their businesses in the country (in addition to their high ranking for ease of doing business).

Not only is Singapore among the top countries leading the world in information and communications technologies (ICT)1, but companies that would want to start their business in Singapore can also enjoy its economic strength.2  “Singapore is already very prominent in asset and wealth management across the region and continues to grow from strength to strength. Singapore has strong institutions to promote business in general and for asset & wealth management in particular, regulators are taking steps to further increase Singapore’s attractiveness – not only in ASEAN but globally,” said Armin Choksey, Asia Pacific Asset & Wealth Management Market Research Centre Leader of PwC Singapore.

For Deloitte Singapore Global Lead for Wealth Management Group, Mohit Mehrotra, Singapore is a great place for investors because of the country’s good legal and political environment. Like Luxembourg, it has a stable political and social environment and a strong economy and can regulate its investors in a responsive and experienced manner.

According to PwC, some European asset managers have been acquiring wealth managers as they seek to control distribution and the customer relationship.3 With the impact of Brexit as well, UK asset managers find a hard time in gaining and attracting European fund clients.

In a survey conducted by Ernst & Young Global Ltd. (EY) of 55 asset and wealth management groups, which are firms that manage in excess of €25 trillion globally, a little over half (51 percent) of respondents are working on or planning to establish entities in Europe, compared to 35 percent from the survey undertaken in 2016.4 While in the past 11 years alone, asset managers’ assets under management globally have more than doubled from $37.3 trillion in 2004 to $78.7 trillion in 2015.5

Singaporean asset managers raised this as a concern, with China being replaced by Europe. 64.91 percent of 57 fund managers that responded regarded political uncertainty in Europe as one of their top three concerns this year, another 45.61 percent saw weakening emerging markets as a major issue while 42.11 percent named rising tensions in voter sentiments and the impact on trade as another key risk. Slowing growth in China ranked fourth in the list of macro concerns at 40.35 percent compared to 85.1 percent citing China concerns in 2016.6

Singapore’s regulatory era causes a high level of stability in which supports growth; measures by the  authorities to ease ways of doing business, together with low tax rates, particularly attract clients.

Meanwhile, Singapore is increasingly leveraging on technology and innovation across the value chain. It can be between the usage of artificial intelligence and data analytics and identification of investment opportunities, and the utilisation of advisors and digital distribution channels to increase fund generation and automate back-end processes.

New wealth has translated into sizeable pools of assets under management (AUM) originating from institutional investors such as sovereign wealth funds (SWFs), pension funds (PFs) and onshore wealth in Southeast Asia.

Singapore’s regulatory era causes a high level of stability in which supports growth; measures by the authorities to ease ways of doing business, together with low tax rates, particularly, attract clients.

 
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References

1. World Economic Forum, Global Information Technology Report 2016, http://reports.weforum.org/global – information – technology – report – 2016/

2. Maria Polevikova, Business Environment in Singapore, 2013, https://www.theseus.fi/bitstream/handle/10024/57443/Polevikova_Maria.pdf

3. PwC, Asset & Wealth Management Insights Asset Management 2020: Taking stock, https://www.pwc.com/gx/en/asset – management / asset – management – insights/assets/am – insights – june – 2017.pdf

4. EY, EY Brexit stats for the wealth and asset management industry, http://www.ey.com/uk/en/newsroom/news – releases / 18 – 02 – 19 – ey – brexit – stats – for – the – wealth – and – asset – management – industry

5. PwC, Asset & Wealth Management: a new era of growth, disruption and opportunity, https://www.pwc.de/de/finanzdienstleistungen/asset – management / assets /studie – a – new – era – of – growth – disruption – and – opportunity.pdf

6. IMAS, IMAS 2017 Investment Managers’ Outlook Survey, http://www.imas.org.sg / public /media  / 2017 / 01 / 24 / 1193_Media_Release_20170109-3.pdf

7. Bank of New York Mellon, The UCITS of Asia? A closer look at the Asia Region Funds Passport (ARFP),  https://www.bnymellon.com/_global-assets/pdf/our-thinking/the-ucits-of-asia.pdf

8. Jek-Aun Long, Zixiang Sun, Benedict Tan, Gurjoth Kaur, Aik Kai Ng, Singapore: ASEAN CIS Framework enhancements, http://www.elexica.com/en/legal – topics/asset – management/050318 – singapore – asean – cis – framework – enhancements#content-main

9. http://securities.bnpparibas.com/insights/asean-cis-regulation-memo-2018.html

10. http://securities.bnpparibas.com/insights/asean – cis – regulation – memo – 2018.html

11. Allen & Gledhill, Singapore, Malaysian and Thai regulators sign MoU to enhance ASEAN CIS Framework to give retail investors wider access to fund managers, http://www.singaporelawwatch.sg/slw/attachments/119070/Capital%20Markets%201.PDF

12. Deloitte, Capturing the multi-trillion dollar asset management opportunity in Southeast Asia, https://www2.deloitte.com/th/en/pages/strategy-operations/articles/capturing-multi-trillion-dollar-asset.html

13. Synpulse, The Singapore Asset Management Industry: Building a Strong Foundation for Future Growth, https://www.synpulse.com / _ Resources / Persistent /  499ccf97 ee46e3f2ef895e72e00c37a9eb46a1ba / White – Paper _ Singapore – Asset – Management – Industry _ EN.pdf

14. Monetary Authority of Singapore (MAS), 2016 SINGAPORE ASSET MANAGEMENT SURVEY, http://www.mas.gov.sg/~/media/MAS/News%20and%20Publications/Surveys/Asset%20Management/2016%20AM%20Survey%20Report.pdf

15. The Deloitte International Wealth Management Centre Ranking 2018, https://www2.deloitte.com/content/dam/Deloitte/ch/Documents/financial-services/ch-fs-1800914_Deloitte-wealth-managemnet-Ranking-2018.pdf

16. The Deloitte International Wealth Management Centre Ranking 2018, https://www2.deloitte.com/content/dam/Deloitte/ch/Documents/financial-services/ch-fs-1800914_Deloitte-wealth-managemnet-Ranking-2018.pdf

17. Synpulse, The Singapore Asset Management Industry: Building a Strong Foundation for Future Growth, https://www.synpulse.com/_Resources/Persistent / 499ccf97ee46e3f2ef895e72e00c37a9eb46a1ba / White – Paper _ Singapore – Asset – Management – Industry _ EN.pdf

18. PwC, Asset & Wealth Management Insights Asset Management 2020: Taking stock,  https://www.pwc.com/gx/en/asset-management/asset – management – insights/assets/am – insights – june – 2017.pdf

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