BNP Paribas poll shows most attractive Ucits markets in Asia
Hong Kong, Singapore and Taiwan remain the most attractive destinations for global asset managers’ Ucits distribution in Asia, according to new research by BNP Paribas Securities Services and Knadel, a specialist consultancy to the investment management industry.
However, challenges remain around fragmentation, regulation and differences in culture which contribute to significant variations in take-up of Ucits in the region. The survey took the views of 50 asset managers of varying size from Asia, Europe and the rest of the world on their experiences of distributing Ucits funds in six markets: Hong Kong, Japan, Malaysia, Singapore, South Korea and Taiwan.
Of those which distributed Ucits in Hong Kong, Singapore or Taiwan, 75% reported experiences that met or exceeded their expectations. Malaysia and South Korea emerged as smaller but rapidly maturing markets, while Japan, more focused on using local funds, is gradually increasing its appetite for Ucits.
One consistent theme was the time and cost associated with registering Ucits funds in the region. Hong Kong, Singapore and Taiwan, generally perceived as the region’s hubs for cross-border activity, were cited as the most popular Ucits markets, with 29%, 20% and 21% of respondents respectively already distributing or planning to distribute Ucits in each market.
These three centres account for the majority of Ucits consumption in Asia. They benefit from the synergy of a strong asset management network, the experience of a large talent pool, and the infrastructure necessary to support distribution, the report said.
Respondents cited gateway access to other Asian markets, particularly China, user-friendliness, and excellent business opportunities as most attractive in Hong Kong, Singapore and Taiwan where distribution is dominated by banks.
In contrast, the time and cost of registering Ucits funds in the three hubs was identified as a significant challenge, who also reported a marked recent slow-down in the speed of approvals of Ucits in Hong Kong.
With 8% and 12% of asset managers currently distributing or planning to distribute Ucits in Malaysia and South Korea respectively, these markets were reported to be less developed than the three hubs, but rapidly maturing and offering significant opportunities.
While small, Malaysia’s asset management industry is perceived as relatively sophisticated. Against a backdrop of expanding household financial assets and increasing income, the signs are encouraging. However the main challenges identified were a strong preference for local funds and difficult legislative and regulatory environments.