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Asia-Pacific offers big scope for investment management industry

The burgeoning middle class income will help drive pension market reforms

NEW DELHI: The investment management industry in Asia-Pacific is set to witness exponential growth driven by strong demographic and economic fundamentals despite short-term challenges, says a report by global consultancy firm KPMG.

“The investment management industry in Asia Pacific has developed at an impressive pace in recent years though the regulatory environment of many jurisdictions poses a challenge,” KPMG said. Buoyed by healthy demographic and economic fundamentals, the level of wealthy middle class has risen significantly in the Asia Pacific region. For instance, the report highlights that India is one of the youngest countries in the world with two-thirds population under the age of 35 years. This is in sharp contrast with countries like China, Japan and Korea which are burdened with ageing population.

Further, limited existing penetration of structured or managed products in many markets has paved the way for continued growth in this region, it noted, adding that much of the wealth in Asia Pacific is held in an asset classes such as real estate and bank deposits.

According to KPMG Executive Director Naresh Makhijani, “Though Asia Pacific accounts for more than 60 per cent of the world’s 6.5 billion population, it remains underdeveloped in terms of penetration of investment management services.”

“Asia Pacific accounts for 27.1 per cent of the global high net worth individual (HNWI) population. The wealth of HNWIs totalled $8.4 trillion in 2006, an increase of 10.5 per cent since 2005,” the report said. However, the burgeoning middle class income would help drive pension market reforms in many parts of the region, Mr. Makhijani added. — PTI

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