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

Abstract

We examine the industrial organization and institutional development of the assetmanagement industry in Asian developing economies specifically in China, Indonesia,Korea, Malaysia, Singapore, Philippines and Thailand. We focus on the size and growthof the buy-side of the respective financial markets, asset allocation, the regulatoryenvironment, 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 inthese environments to the development of the respective capital markets and to theevolution of corporate governance. We find that the fund management industryoccupies 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 offinancial wealth in the region develops and as the pension fund sectors of the respectiveeconomies 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