Be diligent in your information gathering and work closely with local regulators. And have the risk appetite to go beyond the index.” Towers Watson’s Sin says most investors are accessing the growth opportunities of China through their emerging markets exposure. China is like other emerging markets in that it has some country-specific challenges and risks which make due diligence, and manager selection, all the more important. If investors are not large or dedicated enough to have people on the ground themselves, Sin recommends that a gatekeeper – or screen – for manager selection, someone based on the ground with local knowledge, is essential.
Transparency remains an issue. There is a lot of private money in China and disclosure and transparency for these investors is not at the same requirements for public pension funds. Sin, who was previously the World Bank advisor to the Ministry of Finance and Social Security for China, believes if China is serious about becoming a world power it will have to get to OECD standards in transparency, disclosure and regulatory requirements. While there was a focus on China, due in part to its growth, the Global Dialogue examined the investment environment across the region, looking at Hong Kong, China, Vietnam, Korea and Malaysia.