SINGAPORE (January 06, 2024) – Singapore’s fund managers maintain a positive outlook on Asian financial markets this year, as they expect a soft landing after an economically challenging 2023.
According to the findings of the 2024 IMAS (Investment Managers’ Outlook Survey), the high inflation levels across the region have cooled and fund managers are expecting FED rate cuts this year, while the digital asset class is expected to be one of the top growth drivers.
“A majority of the survey respondents are anticipating growth to be steady this year with inflation worries easing compared to last year. Concurrently, respondents expect the Chinese real estate market to stabilise, leading to a positive outlook for Asian financial markets in 2024,” said Thomas Kaegi, chairman of the IMAS Development Committee.
The survey is conducted annually and represents the views of some of the largest fund houses holding a total asset value of more than $ 35 trillion. This year’s edition features the outlook of 79 respondents, most of whom are C-suite officers of Singaporean fund houses.
Jenny Sofian, chairperson of IMAS, said: “This survey acts as a pulse check on the industry amid significant changes. This year, we are seeing an increasing demand for innovative products in alternatives and digital assets, overtaking ESG investments for pole position. This reflects an important shift in investor mindsets, led by the growth of millennial investors.”
No less than 62% of respondents say that the integration of environmental, social and governance (ESG) principles into their current operations is a priority this year. Certain types of ESG initiatives have underperformed, resulting in a drop in investments in these sectors. Still, asset managers continue to give prominence to ESG as one of the top three future drivers of investment growth. These may also prove to be ways for them to differentiate their businesses, underscoring the level of confidence that is envisioned for the long haul.
Considering the ongoing demand from investors as well as regulators to adequately consider ESG opportunities and risks in the investment process, the lack of data and standardisation along with the multitude of ESG standards remain the biggest barrier in implementing their ESG strategies.
Furthermore, many fund managers are aiming to expand their capabilities in advanced analytics, machine learning and AI, while they anticipate that these technologies will primarily disrupt fund operations, the middle office and research industries. IMAS continues to facilitate the digitalisation of the industry by bringing in Fintech’s and asset managers together. In fact, a Fintech directory will be launched in 2024 which will assist asset management firms to discover the tech solutions that other players in the industry are using, along with the newest innovations that are coming into play among the IMAS’s members and partners.
The US dollar is expected to remain steady against the Singapore dollar and the Chinese yuan. A significant 65% of respondents are confident that the FED funds rate will experience a reduction, resulting in this currency stability to remain at the start of the new year. They also believe that the JP Morgan Asian Credit Index will end 2024 stronger with a 50 – 100 basis points drop in yield. Meanwhile, the MSC Asian Ex-Japan and China Index is expected to rally by 10 – 20%. An overall strong performance is anticipated this year in the regional market indices.
The questions asked in the survey are updated yearly to capture the latest and most pertinent topics in the industry. Elections in Asia is a new segment for the 2024 edition with 60% of the survey respondents opining that the Taiwanese presidential election has the highest potential for surprise.