But should it bother? Singapore and Hong Kong have built funds management sectors by lowering tax rates to attract businesses and adopting the UCITS standard. They are now entrenched centres of regional distribution, hosting many offshore managers who show this path for others lured by Asia’s high savings rate and appearance as a cohesive region. But the institutional opportunities in Japan and the retail appeal of Hong Kong, Singapore and Taiwan tell only part of the Asia story. Other big markets – China, Korea, India, Malaysia – are tough for offshore managers to crack. In some cases, this is due to a lack of distribution networks.
In others it’s deliberate: it’s hard to see China relaxing its constraints on foreign managers who want to enter until its own funds management sector is fiercely competitive with the world’s best. It’s true that UCITS will be the main retail distribution game in Asia for the foreseeable future. Many Chinese, Indonesian and Taiwanese rich funnel their wealth through Singapore’s private banking channels.
And while Japan is the deepest institutional market, other opportunities for managers are emerging: some of Asia’s mega sovereign wealth funds – Korea’s $US300 billion National Pension Fund and China’s sovereign investors – are beginning to send tender documents offshore. It’s clear – to Weir’s task force and managers on the ground in Asia – that many of the region’s funds management industries are forming. Attempts to create mutually beneficial rules across the region should be pursued. The passport might not get up, or it might take up to 10 years to circulate – if it does emerge, it could be a valuable tool for managers doing business in evolving Asia-Pacific markets.