The manager of Pengana’s Asian equity long/short fund, Diane Lin, says government policy is so important in China “that it’s almost a top-down factor in our process, which can override any bottom-up analysis”. Partners Group, the Swiss manager which makes nothing but private investments, stresses the importance of being on the ground and hiring locals to work for you. And not just any locals – according to Urs Wietlisbach, executive vicechair. “In India, you need to know people among the Maharaja classes. For China you need ‘Chinese Chinese’ – a San Franciscan-born, Mandarin-speaking Chinese person won’t get their foot in the door.” Partners Group has also experienced the region’s fastand- loose way with investment management agreements: “that’s why we have 20 lawyers in our head office”.

Things are getting better, points out the portfolio manager for the Fidelity Investments Asia Fund David Urquhart. He notes that the Credit Lyonnaise corporate governance score for the region crept up every year between 2001 and 2007, with traditional laggards China, Indonesia and The Philippines catching up to regional leaders Singapore, Hong Kong and India. That doesn’t change the fact, according to Aberdeen Asset Management’s Asian chief Hugh Young, that “the people you see sitting around the table of a Chinese board aren’t necessarily the ones in control of the company… they’re waiting for the phone call from Beijing.” Young says the state of Asian corporate governance is perfectly understandable, and that it cannot help but progress.

“They’re going through the stage that developed markets were at 20 or 30 years ago, as they all became shareholder democracies.” When Aberdeen set up in Asia 25 years ago, there were two places only to locate a head office – Hong Kong or Singapore. “Hong Kong was the frantic, short-term horizon type of place. You had Jardine Fleming there moving hot money in and out, and doing it very well, I might add. But Singapore was the conservative, measured, slightly boring place and that suited Aberdeen just fine – we’ve always been the tortoise rather than the hare,” Young says. “You can’t let general fears about corporate governance keep you away from the broader opportunity – you take it on a company-by-company basis as you do in any market. We only invest in a company after we’ve met its management and written a research note. And we only invest in people we feel we can trust – in Asia like anywhere else.”