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Asset managers in Asia and the US are confronting "unprecedented and unexpected challenges."

Updated: Mar 28, 2023

The difficulties facing asset managers are unusual and unanticipated. On the first day of ALFI's Global Distribution Conference in Luxembourg, a panel discussion delivered this message.

The panel discussion examined how asset managers can deal with urgent geopolitical challenges. It was moderated by Camille Thommes, director general of the Association of the Luxembourg Fund Industry (ALFI), and it included Jim Fitzpatrick, president & CEO of Nicsa, and Sally Wong, CEO of the Hong Kong Investment Funds Association (HKIFA).

Thommes explained to the audience during the session that the world has undergone a profound geopolitical transformation as a result of the Covid-19 pandemic, a demanding regulatory agenda with an increasing emphasis on sustainable finance, and challenges such as skyrocketing energy prices, higher inflationary trends, and higher interest rates.

"What can investment funds associations such as HKIFA, nicsa and ALFI do to support their respective members?" was the question put to the audience in light of this.

The banking sector in Hong Kong has been concentrating on the Covid-19 travel limitations, according to Wong. Wong said, "The policy is not conducive to engaging with clients."  Many talented individuals at all levels of senior management were being "harmed."

She went on to say that there have been significant withdrawals from the fund sector. 'January saw robust outflows. Equities and multi-asset are better, but bonds suffered substantial outflow this year ," she lamented. Wong went on to say that in an atmosphere of inflation, there would be a paradigm shift in how finances adapt to certain demands.

According to Fitzpatrick, the inflationary climate in the US is the main source of concern from a market standpoint. Business-wise, ESG products are the main topic of conversation in the nation. "Europe is miles ahead of the US in this regard."

Fitzpatrick brought up the subject of digital assets, where "firms are spending lots of time assessing what products will fit." According to Fitzpatrick, regulation will have a significant impact on the decisions made by investors. Fitzpatrick said that "alternative investment space also evolved in this space." People demand access to such type of investment (alternative investments), and mergers are searching for methods to promote these products.

Fitzpatrick noted that skill is a crucial problem from a commercial standpoint. The role of talent is a major problem for the financial sector, especially in light of the difficulties caused by the Covid-19 epidemic. He also brought up the problem that businesses are pressing for people to return to the workplace.

Wong emphasized the significance of entity and fund levels under Hong Kong legislation. "Green finance association are working hard and creating various funds since it’s a key area and everyone understands the importance."  She told the gathering that every market aspires to be a sustainable center. Other significant problems, according to Wong, are how to develop tight relationships with international partners and obtain ISB accreditation. However, "SG is still early with respect to investor education in Hong Kong."

Fitzpatrick explained that different people in the US had different opinions on ESG. "There are different points of view, which we see in the marketplace. Is ESG important? Relevant? How do we define it?" he asked.  He explained to the audience that ESG and sustainable investment are two separate things and stated that "the US is still behind the EU in ESG products." The US will "continue to learn from Europe as it continues to evolve" going forward.



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