March 2013

ASSOCIATION COLUMN: Asia’s potential

Hong KongAmong the mega-trends influencing the asset management industry worldwide are the increase in fund regulation with transnational impact and the growth of asset management in Asia. Regulatory efforts that reach around the globe have become the norm. It is crucial that the dialogue shaping such regulations fully include voices from the Asia-Pacific region’s dynamic, diverse markets. The perspective of Asia-based funds and their investors will enrich and improve the global regulatory dialogue. Funds are also becoming an increasingly common and important tool for Asian investors. The growth and potential of the asset management sector in many Asian locales is the impetus for ICI Global to deepen and strengthen its presence in the region. We are expanding from London, opening an office in Hong Kong on May 1. The office opening follows heavy engagement with fund leaders in the Asia Pacific region in the year since ICI Global launched. We have held several Asia Pacific chapter meetings, and travelled to the region seven times in 18 months. This new effort in Asia will be led by Qiumei Yang, a policy and market development expert with a global career spanning three continents. Yang comes from the London Stock Exchange to serve as executive vice president, head of Asia Pacific. ICI Global will be responding to issues of greatest interest or concern to Asian asset managers. These include: capital market regulation; the transnational impact of the Foreign Account Tax Compliance Act, the Volcker Rule, and Ucits and other EU reforms with cross-border effects; and the potential impact of global “shadow banking” reform efforts. The growing role of funds in pension savings, including in the Asia-Pacific region, is also of strategic importance to many funds and their investors worldwide. Asian leaders are also aware of the retirement security challenges the region’s burgeoning middle class will face. Likewise, they continue to explore how defined contribution systems could play a vital role in fostering retirement savings. ICI Global, leveraging ICI’s expertise in the US retirement market, will engage with Asian leaders to share insights and research. We are also organising a global retirement savings conference in Hong Kong in June. Given the size of its economy and its developing capital markets, the new but growing investment fund sector in China offers substantial opportunity. When we speak of Asia, we keep in mind the diverse economies that comprise the region. There are fast-growing markets, such as China, India, and Malaysia. There are large, established markets such as Japan and Australia. It’s natural that Asia-Pacific fund managers would discuss and shape a common stance on pressing global regulatory policy issues. We will help form this network. Elsewhere in the industry we have seen particularly strong investor interest in exchange-traded funds (ETFs), particularly those operating in the Renminbi Qualified Foreign Institutional Investor (RQFII) programme, which permits qualified investors to access stock and bond markets in mainland China. Thus far, four firms are authorised to operate RQFII ETFs, but that number and size will grow rapidly. That growth will depend, in part, on ensuring sound rules for the market and trading environment for ETFs in Asia. Drawing together ICI Global member firms, we can amplify the voices of Asia’s asset managers and work to fulfill the continent’s great promise for funds and their investors. Dan Waters is managing director at ICI Global, a trade association ©2013 funds europe

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