Copyright scmp
Hong Kong and mainland China will continue to be the growth engine for asset-management companies as both local and international investors are starting to shift from holding cash to investing in equities and bonds in the region, according to the top boss of US fund house Invesco. “There is a trend of redistribution of people’s portfolios, as they are looking for value opportunities, which are showing up in emerging markets, equity, emerging-market debt and global equities,” said Andrew Schlossberg, president and CEO of Invesco, in an exclusive interview on Tuesday. A combination of interest-rate cuts and confidence in markets was driving the trend, as the macroeconomic and market outlook had more clarity this year, he said. The Hong Kong Monetary Authority (HKMA) has followed the US in cutting the base interest rate by half a point in the past six weeks, with analysts expecting more rate cuts in the coming months. “There are a lot of cash deposits held by people in China that will find their way into the markets,” Schlossberg said. “We are seeing the trend from our joint venture Great Wall Invesco in China, where people are investing in a fixed income plus fund, which is a balanced portfolio with a mixture of fixed income and equities.” Schlossberg was a speaker at the recently concluded Global Financial Leaders’ Investment Summit. Attended by 300 top global financiers, it was the fourth edition of the annual flagship gathering organised by the HKMA. “It is my third year attending the summit, and I think it is just getting better and better,” he said, adding that the attendees came from not just the US but also Europe and other parts of Asia. “My biggest takeaway from the summit was how people are talking about capital deployment across Asia, in Hong Kong and reinvesting into China as well. The attitude towards the Hong Kong and mainland China markets is a lot more positive this year. I also found people on the street in Hong Kong have more smiles on their faces this year, which may reflect that people have more confidence in the economy and the capital markets.” Invesco’s business reflects the growing trend. For the 12 months ended in September, the firm recorded US$30 billion of net capital inflows from Asia-Pacific clients, 11 per cent higher than a year earlier and higher than from North America and the Europe, Middle East and Africa region. Invesco’s assets under management in Asia-Pacific jumped 20 per cent from a year earlier to US$320 billion, with clients in mainland China, Hong Kong and Taiwan accounting for US$160 billion and Japan for US$90 billion. Schlossberg said there was still room to grow, noting that the ageing population in Japan, mainland China and Hong Kong would drive demand for investment products focused on retirement. “In Japan, there were corporate-governance reforms, while Hong Kong and mainland China had a lot of capital-market reforms and stimulus measures,” he said. “We are starting to see early stages of people moving from more savings to more investing, while they are investing less in property but more in the capital markets.” International investors from Europe, the UK and the Middle East were showing more interest in investing more in Asia this year, as were some US investors, Schlossberg said. “We are starting to see capital flow into these Asian markets,” he said. “They are doing it either through single-country investments or through global investment strategies with a lot of investment in Asian markets. People are searching for value, and a lot of the markets here have been undervalued relative to other markets around the world for a long time.” Atlanta-headquartered Invesco, established in 1935, operates in more than 25 countries and manages US$2 trillion in assets globally. Hong Kong, the firm’s regional headquarters for four decades, was a good connector between China and the West, Schlossberg said. Aside from the summit itself, Schlossberg also praised this year’s welcome dinner on November 3, including a dessert inspired by the game of mahjong and a movie presentation highlighting Hong Kong’s countryside hiking trails. “I have come to Hong Kong many times and have done a little bit of hiking on The Peak, but I did not know there are so many hiking trails as shown in the movie at the welcome dinner,” he said. “Mahjong is quite popular in the US. My mother also plays, so I sent her a photo of the dessert. I thought it was a very nice touch.”
