Asset Management Industry in Asia: Dynamics of Growth, Structure and Performance

Abstract

We examine the industrial organization and institutional development of the asset management industry in Asian developing economies - specifically in China, Indonesia, Korea, Malaysia, Singapore, Philippines and Thailand. We focus on the size and growth of the buy-side of the respective financial markets, asset allocation, the regulatory environment, and the state of internationalization of the fund management industry in its key components - mutual funds, pension funds and asset management for high net worth individuals. We link these the evolution of professional asset management in these environments to the development of the respective capital markets and to the evolution of corporate governance. We find that the fund management industry occupies a very small niche in domestic financial systems that are dominated by banks. At the same time, we find that its growth has been very rapid in the early 2000s and we suggest that this is likely to persist as the demand for professional management of financial wealth in the region develops and as the pension fund sectors of the respective economies are liberalized to allow larger portions of assets to be invested in collective investment schemes.

Keywords: Asset management, Asia financial systems, pension funds, mutual funds, private banking

JEL Classification: G23, O16