NEWSLETTER: The Afterglow of Obama's Victory

Perhaps it’s the warm glow generated by Barack Obama’s convincing win at the polls in the US election last Tuesday, but the news from the markets this week seems a little more upbeat than it has been for a while. European stock markets followed Asian markets up in early trading, Asia having been buoyed by China’s newly announced $586bn ‘anti-downturn’ package. It probably helps that President-elect Obama won’t be able to get his feet under the table until next year. That means we can focus on the triumph of hope over cynicism that his victory represents, and the enormous punch in the face it has delivered to racial prejudice, without getting into too many details as to whether even the amazing Mr Obama can solve the global financial crisis.

Speaking of which, here in Europe, there were a couple of scraps of good news from the fund industry this morning. These helped to stop us bumping back down into the doldrums too quickly after a weekend spent in the unusual pursuit of loving America.

The 14th edition of the Irish Fund Encyclopedia, released today by Lipper, shows that the Irish fund industry grew by a cheering 18% last year to reach almost $2bn. The figures are to 30 June 2008, so don’t take account of the most recent financial crisis, but they nonetheless provide some reason for optimism, according to Lipper.

“Ireland’s fund industry continues to grow, albeit at a slower rate,” comments Ed Moisson, director of European fiduciary operations at Lipper. “The industry’s success in servicing non-domiciled funds, as well as money market products, has served it well of late and should continue to do so in current circumstances.”

Meanwhile, another new report from Lipper FMI highlights the substantial growth opportunities in the Asian fund industry. The Lipper FMI Asian Fund Market Almanac 2008, launched today, shows that mutual funds currently account for just $1.7 trillion, or 6% of total household financial assets, across Asia. They could grow by 5% annually or more, even accounting for the recent downturn.

 “The Asian fund industry is very much at a similar stage to Europe in the late 90s, with similar growth rates and developmental features,” says Bella Caridade-Ferreira, publisher and editor at Lipper FMI. “ Any fund company looking to expand into Asia should look to the long term. It’s not a short-term proposition. Ultimately the region has the potential to eclipse both the US and Europe.”

Much, of course, will depend on the success of China’s $586bn stimulation plan, which President Hu Jintao will bring to a global financial crisis summit in Washington this week. Already China buffs are pointing to the spectre of social unrest that could come to haunt China’s communist administration if the uneasy alliance it has forged between one-party rule and capitalism is destabilised by job losses and a decline in prosperity. However, I hear that President Hu has now spoken to President-elect Obama on the telephone, so perhaps Mr Obama will have explained to him that strangely overlooked truth: that capitalism into communism doesn’t really go.

Fiona Rintoul, Editorial Director
©2008 Funds Europe

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