Alternative investments in Asia: Continued growth in uncertain times 1 March 2017

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Valérie Mantot

Head of Business Development, Asia Pacific & Mauritius

We have all witnessed a number of interesting developments in Europe, in the Americas and in Asia throughout 2016.

The changes we have seen have directly impacted the Singapore asset management industry and have been the subject of a number of debates amongst Singapore based investment funds experts and industry professionals.

SANNE, alongside Nabarro LLP, hosted a roundtable discussion forum in Singapore on 1 December with an invited panel of industry experts from Knight Frank, Lazard, Lloyds and EY. The panel discussed their key experiences and their 2017 forecasts for the Asian asset management industry. Although, discussions were mainly focused on alternative investments, some of the panel’s inputs were relevant to all asset classes and sectors upon reflection.

Key roundtable insights
The Trump impact The first topic debated was the impact that Donald Trump’s election in the United States would have across the globe. There was general consensus amongst the participants that they would adopt a ‘balanced’ approach post-election until there is more clarity on Trump’s administration strategy and priorities. Moreover, the panellists felt that Trump’s pro-business rhetoric could be quite positive in the APAC region provided that protectionist policies would not have been enforced by the Trump administration as announced during his presidential campaign.

Brexit The panellists covered some of the political and economic events impacting Europe in 2016, including the UK’s EU referendum result and decision to ‘Brexit’. Europe was expected to remain as the no.1 location for outbound  investments sponsored by APAC institutional and private investors. According to the experts on the roundtable, this leading position is partly explained by the fact that the US is inaccessible to certain types of investors for tax reasons. In particular - and despite Brexit – the city of London is, and will remain, an attractive real estate investment location due to the potential returns available once the cost of borrowing has been factored in.

Growth sectors In terms of European assets, the panellists indicated that student accommodation and logistics’ facilities were two sectors in which they expected to see grow in the United kingdom and Germany over the next few years. Some of the panellists were also anticipating the same trends to occur, for the same asset classes, in Japan and Australia.

New attractive markets Another attractive market which was highlighted during the debate is Japan. Some of the experts shared that a good proportion of the large Japanese institutional investors, such as Japan’s £1trillion Government Pension Investment Fund, have announced upcoming funds allocations into overseas alternative investments. However, the panel noted that it will take some time before this becomes a trend more broadly across the Japanese institutional investors which are still, as a majority, focusing more on the domestic market.

Growth of emerging markets One of the final topics addressed by the panellists looked at the challenges and opportunities in the Emerging Markets. In the key growth areas of education, healthcare, food and beverage, IT and technology and hospitality, the panel all agreed that there were growing opportunities in SEA countries such as Vietnam, Indonesia, Malaysia and the Philippines.

This can be seen by the increasing number of funds being focused on these markets because of the challenges first-time or small/ medium size managers face when attempting to launch pan-Asian funds.

In summary It was clear from the panel discussion that whilst there continues to be concerns around the potential impacts the developments of 2016 will have on the Singapore asset management industry in 2017 and beyond, there are a wide range of opportunities that position Singapore well to continue to compete as a leading international financial centre and in the asset management industry globally.

SANNE/Nabarro Roundtable series Following the success of this roundtable, we are delighted to announce that SANNE and Nabarro’s roundtable discussion forums will continue into 2017 on a quarterly basis. These will continue to be held in Singapore and engage with experts and industry professionals.

Should you wish to be involved, please get in touch with [email protected]

Authored by Valérie Mantot, Director at SANNE.