“Rarely has there been a search, in my 15 years in Asia, for Australian equities. “There are opportunities, but you need to calibrate them on a country-by-country approach and pick out the opportunities for each market. You just can’t sell Australian equities because you’ve got a great product.” ING Investment Management (ING IM) is based in 33 locations throughout Asia to access retail and institutional investors. In each office, it aims to adapt to the tastes of the local market. This includes selling UCITS funds into Singapore, Hong Kong and Taiwan, according to the PricewaterhouseCoopers (PwC) report, Global Fund Distribution 2010. Becoming local is a challenging process that often surprises enterprising funds managers, says Steven Billiet, who moved from the manager’s Taiwan office to helm its Australian business this year. “The most difficult thing is trying to make your head office in the US, Europe or Australia understand how different Asia is. From every angle you choose – investor appetite and behaviour, regulation or tax – all of it is so hugely different. Managing Asia as one block is impossible.
What works in Japan won’t work in Korea, Malaysia or the Philippines from a product, regulatory and client service point of view. You need to have a specific strategy for every market. “Each market has its specific expectations from an asset manager. Even with this Asia passport, it’s about more, a lot more, than product. It’s about how you position products against what is already in the local market and how you provide client services.” The good news for institutional managers is that some prominent wholesale investors and sovereign wealth funds in the region – such as the China Investment Corporation, Government of Singapore Corporation and Korea Investment Corporation – are familiar with cross-border mandate negotiations.
Billiet goes so far as to say these investors are comparatively “easy clients” compared to retail investors. They are more sophisticated, know which exposures they are looking for and can be serviced within a flyin, fly-out schedule. “Clearly that’s a global playing field. There you will meet your global competitors fighting for the same client.” The only capital that ING IM in Australia has sourced from China is through its joint venture with the China Merchants Fund, which has signed a $100 million resources mandate with the manager. Billiet says the Chinese funds management industry is accelerating swiftly, but is still small and less developed than the Japanese, Hong Kong, Singaporean and Taiwanese sectors, and will stay this way for some time. “You would need to look quite a long way ahead to see that China could be a dominant player in our industry. It’s still a very local industry, still very much a Chinese equities and fixed income-oriented market, and it still has a lot to learn. And they don’t want to see foreigners come in and take over: they will make sure they have a local industry and knowledge base before letting more experienced foreign companies in.