KUALA LUMPUR: Malaysia’s asset management industry which has grown rapidly over the last decades has shown signs of a slowdown amid fundamental shifts which are expected to alter the business landscape, said Securities Commission Malaysia (SC) chairman, Datuk Syed Zaid Albar.
He said over the past 20 years, the industry had been recording strong growth with a compound annual growth rate of 16 per cent.
“The focus on the asset management industry is timely as data from the last five years suggested that it might have reached an inflection point with signs pointing to slowing future growth. Concerns over the growth trajectory are also given impetus as industry shortcomings are increasingly raised by the investors and industry themselves,” Syed Zaid said yesterday.
He said this in a keynote address in conjunction with the launch here of the first joint research report of the Institute for Capital Market Research (ICMR) and the Nomura Institute for Capital Markets Research (NICMR) based in Japan, themed ‘The Evolving Business of Asset Management : Malaysia’s Perspective’.
The ICMR was established by the SC in February 2018 as a think tank initiatives dedicated towards facilitating further acceleration of the growth momentum, while ensuring it remains inclusive, sustainable and resilient.
Syed Zaid said from the business environment lens, this report recognised that the industry must contend with structural shifts which are reshaping the very nature of asset management. These included the changing demographic trend and investor preferences, digitalisation, the availability of appropriately skilled talents, as well as market structure and regulations, he said.
Meanwhile, ICMR director Datin Azleen Osman Rani said the asset management industry needed revitalisation and more innovation given the fast changing economic and financial landscapes.
She said among the key highlights of the report was that the changing preferences of customers was the most critical external shift affecting the business over the next 12 to 24 months. In light of this, she said increasing demand was seen especially in sustainable and responsible investment funds, private mandate and wholesale funds, as well as non-domestic equities and alternatives.
The report also found that the existing talent pool are not aligned with the broad direction the investors expected, while most asset managers also envisaged that digitalisation will highly impact their businesses. Azleen said the report had also highlighted some recommendations such as the need for the industry to diversify to revitalise it.
There was also a need to look at how asset managers could internationalise by tapping into the growing wealth in emerging markets, as well as attracting foreign inflows to diversify the investor base, she said.
“This could be achieved through further regulatory harmonisation efforts, as well as private sector driven initiatives such as cross-border merger and acquisition or partnership structures,” she added. — Bernama