Searching for sunshine amidst global storm

Welcome to the first edition of PWM Asia, your dedicated magazine covering investment product distribution throughout the region. It is our aim to cover the developing dynamics of distribution. This means monitoring the changing nature of relationships between fund and capital market product manufacturers and their distribution outlets, be they private or retail bankers, discretionary wealth managers, fund selectors or independent advisers. We will also survey the types of products being developed for distribution in Asia. Like Europe, where PWM has enjoyed a growing reputation as the Financial Times’ magazine for the wealth management industry since 2001, Asia is far from a homogenous region. That’s why for the first issue, our team of journalists has been spending time in different markets, including Hong Kong, China, India, Malaysia and Singapore to report on product provision, distribution, regulation and investment trends. With a credit crisis hitting much of the Western world, Asia is one of the few areas where international investment houses and their global distribution partners can hope to achieve significant inflows and revenue growth. But the problems which European and American houses are suffering at home mean their Asian initiatives can also be affected. Troubled Belgo-Dutch financial group Fortis has been forced to cancel a proposed asset management joint venture with its shareholder and China’s second biggest insurer, Ping An. There were high hopes for this alliance, which was set to make Fortis Investments the preferred provider of financial products to Ping An’s distribution network in China and Asia. Although Fortis had been struggling to pay for the partial acquisition of its Dutch banking competitor, ABN Amro, the link-up with Ping An was a relief to many battle-weary executives. As the chief investment officer for the funds arm of Fortis said in the summer: “If you could choose your second home market, it would be China.” In terms of sustained economic growth, there is no comparison between what a European institution can do on its doorstep and what it can achieve with a reputable Chinese partner. Despite the liquidation of the proposal, his logic still holds. But these situations are not always straightforward. Just because there is an agreement, it does not mean assets will automatically flow in. Our cover story this month (pages 16 to 19) reveals that many foreign players in the region have not properly taken account of local sensibilities, regulations and investment habits when dealing with distributors. Yet expansion activity in Asia continues, despite the global crisis. Michel Cicurel, the chairman of LCF Edmond de Rothschild, recently compared the move by Bank of China to pump E236m ($326m) into his aristocratic private banking and fund management house as “a little ray of sunshine” amidst the current storm.