Home Economy Asia-Pacific future market for money management firms: KPMG

Asia-Pacific future market for money management firms: KPMG


New Delhi : The investment management industry is set for exponential growth in Asia-Pacific including India, despite the challenges it faced in the region, according to a report by international accounting and consultancy firm KPMG.

“Asia-Pacific’s healthy demographic and economic fundamentals, rising middle class and the limited existing penetration of structured or managed products in many markets has paved the way for continued growth,” it said.

The report identified Japan and Honk Kong as dominant players with the highest quantum of assets under management in the region. At the same time Japan, along with China and Korea, is burdened with an ageing population and falling birth rates, KPMG said.

“In contrast, two-thirds of India’s population is under the age of 35 years, making it one of the youngest countries in the world and a future potential market for fund managers,” it said, and estimated the size of asset under management in the country to grow at the rate of 16.3 percent from $59 billion now to $230 billion by 2015.

The report said this rising level of wealth among the middle class would be a key driver for the funds management industry.

KPMG estimated 21.1 percent of the world’s high net worth individuals to be in the Asia-Pacific region, with much of the wealth held in unstructured assets, particularly real estate and bank deposits.

According to it, these unstructured assets can be drawn into and retained within the investment management structure.

Naresh Makhijani, Executive Director of KPMG’s India operations, said though Asia-Pacific accounts for over 60 percent of the world’s population, it remains underdeveloped in terms of penetration of investment management services.

“Nevertheless, there is going to be a sea change in this regard as ageing populations and burgeoning middle class incomes help drive pension market reforms in many parts of the region”, he added.

The KPMG report said issues such as management of performance in volatile markets, the ongoing battle for talent, and the fragmented nature of the Asian marketplace were some of the “significant short term challenges” that the industry faced.

Additional hurdles faced were regulatory constraints such as the imposition of currency and capital controls, qualifying criteria for foreign institutional investors, conflicts or obligations arising from a multiplicity of regulatory bodies, and the obligation to form a joint venture with a local firm.

The report said regulatory reforms would stimulate more orderly development in capital markets in this region.