New report from Celent The Global Credit Crisis: Implications for the Asian Wealth Management Market investigates Asian wealth management after the credit crisis.
Asia, while the least affected of all the continents, has witnessed tectonic shifts in the way investors think and behave with regard to their wealth. All that was previously certain and taken for granted is now being questioned. Investors have decided to modify their behavior.
The main points of the report are:
-Investment behavior among Asian investors has undergone major changes in the months following the credit crisis. This includes shifts in investment objectives, investment style, and shifts in provider and advisory preferences. The conservative and risk-averse Asian investor has taken the following approach towards asset allocation: 1) Minimization of portfolio risk by bringing down exposure to equities and selecting only quality equity exposure with a long-term horizon in mind. 2) Looking at tangible asset classes to back stop financial investments. 3) Speculation and “easy money” methodologies being given a cold shoulder. 4) Investors are displaying a greater aversion to leverage;
-Asia is struggling to keep its financial system in working order. As the global financial crisis deepens, the emerging economies of Asia have increasingly come under stress. The following impacts are being felt across Asian economies: flight of foreign capital, increasing borrowing costs, increases in loan losses, and a slowing down of export-led growth;
– The South Asian wealth management market is registering one of the highest growth rates in wealth markets across the globe. The South-East Asian wealth management market is one the of the faster-growing wealth markets in Asia. The East-Asian wealth management market is the least homogenized market in Asia. While China and South Korea are emerging as key growth markets with strong internal consumption demand;
– The Asian wealth management market is not homogeneous. Korea, and Taiwan in the East, Singapore in the South-East, and United Arab Emirates in the Middle East possess sophisticated and mature wealth management markets reacting to the credit crisis in much the same way the advanced economies in the Western Hemisphere did. Thailand, Indonesia, Malaysia, and Vietnam in the South-East, China in the East, and India in South Asia are reacting more gradually.
The research comes to the following conclusions:- Asian wealth management market is experiencing changes in investor behavior,
– Segment growth is showing signs of slowing down in the near term,- Asset allocation is moving towards the domestic markets and Asian growth economies,- Investors prefer government-sponsored providers to private providers of wealth management offerings,- Product preferences are moving away from risky equity-linked products to stable-value products.
Until as recently as the second quarter of 2008, it was believed that Asia would be spared any significant fallout from the credit crisis developing in the US and Western Europe,” says Ravi Nawal, analyst and author of the report, Celent. “The notion that the financial systems of the majority of Asian countries are ‘loosely decoupled’ from the world economy has recently come into question due to the adverse market movements being felt in most Asian financial centers.”
L.D.