Singapore IMAS Investment Managers Outlook Survey 2023: 50 C-Suite Totalling $30 Trillion AUM, Keep Cash due to Uncertainties, 60% Sees Recession, Demand for Fixed Income & Bonds, Optimistic on Asia Equity & Credit Markets
4th February 2023 | Hong Kong
The Investment Management Association of Singapore (IMAS) has released the IMAS Investment Managers Outlook Survey for 2023, surveying more than 50 C-Suite of fund houses in Singapore with total AUM of around $30 trillion. On 2023 economic outlook, 88% of the respondents sees a high degree of economic uncertainty is keeping investors from investing their cash and 60% of the respondents sees the global economy will enter a recession in 2023 with GDP growth at less than 1.2%. On investment opportunities, Higher yields has resulted in demand for fixed income strategies & bonds, including global bonds, corporate bonds, income strategies, fixed maturities, and private debt. On equities, Asian market led by China is expected to be the best-performing region, and responders are optimistic on Asian equity & credit markets with 70% of the respondents expecting a solid recovery in equities. More on Singapore IMAS Investment Managers Outlook Survey 2023 below.
“ 50 C-Suite Totalling $30 Trillion AUM, Keep Cash due to Uncertainties, 60% Sees Recession, Demand for Fixed Income & Bonds, Optimistic on Asia Equity & Credit Markets “
Rajeev De Mello, Chairman of the IMAS Development Committee: “After 3 years, China’s relaxation on its restrictive Covid-19 policy will bring about immediate and substantial impacts to both its economy and the Asian market in general. Fund managers see the event as the light in an otherwise gloomy 2023 marked for a global recession. Furthermore, concerns over the US-China tensions are softening as there seems to be a period of calm after many years of stress … … After aggressively raising interest rates in 2022, the US Federal Reserve has indicated that it will be slowing the pace of hikes in 2023. The Fed has already stepped down from a pace of 0.75% hike per meeting to an increase of 0.5% at the December FOMC meeting. Consequently, fund managers opined that Asian currencies including the Singapore dollar will appreciate against the US dollar by the end of the year.”
Chairman of IMAS, Jenny Sofian: “In this new era, product innovation and ESG concerns are key considerations for the industry. Asset managers who prioritise these areas will be better positioned to gain new market share going forward, and also in the fast-growing client segments, such as the millennial group.
Singapore IMAS Investment Managers Outlook Survey 2023
The survey, conducted by the Investment Management Association of Singapore (IMAS), represents the views of fund houses with combined assets under management of approximately $30 trillion globally. The 2023 survey covered more than 50 respondents, comprising mostly C-suite personnel of fund houses in Singapore. This annual survey, which started in 2016, is the only survey of its kind in Asia conducted by an investment management association. It aims to keep tabs on the main challenges and concerns, along with the latest developments and growth trends in the investment management industry.
- Respondents AUM – $30 trillion
- No. of Respondents – More than 50 C-Suite of Fund Houses in Singapore
1) 2023 Investment Outlook
- 88% of the respondents – High degree of economic uncertainty is keeping investors from investing their cash
- Risk aversion – Persistent inflation, a high risk of recession, a major war in Europe and very poor investment returns in 2022
- General consensus – inflation will remain “sticky” in 2023 with core inflation in the US likely remaining above 3%
- 60% of the respondents – Global economy will enter a recession in 2023, GDP growth at less than 1.2%.
- Business confidence – declining and weak as we have seen in Singapore. Governments and central banks are unlikely to be able to cushion a slowdown
- Equity & corporate bond markets – Will find support when Central Banks end their rate hiking cycles as valuations have improved after the market swoon in 2022.
2) Investment Insights
- Higher yields – Appetite has re-emerged for fixed income strategies
- Bond Demand – Global bonds, corporate bonds, income strategies, fixed maturities, and private debt
- Cautious – Emerging market local-currency bonds
- Asian market led by China – Expected to be the best-performing region
- Optimistic – Asian equity & credit markets with 70% of the respondents expecting a solid recovery in equities.
3) Currencies
- 45% of the respondents – Expect the US dollar to depreciate between 5% to 10% against the Singapore dollar
- 41% of the respondents – Greenback will drop by 5% to 10% over the Chinese yuan.
- US dollar – Overvalued levels during the second half of 2022. European Central Bank continues to tighten monetary policy and the Bank of Japan exits its negative rate policy, the attraction of the dollar will wane.
4) Key Trends & ESG
- Key drivers of future growth for Investment Industry – ESG investments, rising product innovation, and the growth of millennials as a segment
- ESG – Top of mind for investors
- 62% of the funds – Looking into developing business lines around sustainable finance to differentiate their business in 2023
- ESG Implementation – Fund managers cite a lack of data standardization. Analysts are not fully able to compare company performance. Growing interest in the adoption of fintech solutions to improve ESG datasets and tools.
Investment Management Association of Singapore (IMAS) – Thanks to higher yields, appetite has re-emerged for fixed income strategies, as uncovered by the survey. Bond demand is going up across the spectrum including global bonds, corporate bonds, income strategies, fixed maturities, and private debt. However, investors are still cautious about allocating to emerging market local-currency bonds.
The Asian market, led by China, is expected to be the best-performing region amidst the muted global economic outlook. Despite continued concerns over inflation, there is optimism on Asian equity and credit markets with 70% of the respondents expecting a solid recovery in equities.
The survey indicated that respondents believe an increase in ESG investments, rising product innovation, and the growth of millennials as a segment, will be the key drivers of future growth for the investment industry in the coming years.
In resonance with global climate change challenges, ESG is still poised to be top of mind for investors in the foreseeable future.
The survey found that 62% of the funds are looking into developing business lines around sustainable finance to differentiate their business in 2023. In terms of implementation, fund managers cite a lack of data standardization as a key challenge in the Environmental, Social, and Governance (ESG) space. Analysts are not fully able to compare company performance. Nonetheless, there is a growing interest in the adoption of fintech solutions to improve ESG datasets and tools.
In general, the high degree of economic uncertainty is keeping investors from investing their cash, according to 88% of the respondents. Persistent inflation, a high risk of recession, a major war in Europe and very poor investment returns in 2022 all contribute to a greater sense of risk aversion. There is a general consensus that inflation will remain “sticky” in 2023 with core inflation in the US likely remaining above 3%, which is significantly above what households and investors have been used to before the Covid crisis. In addition, over 60% of the respondents believe that the global economy will enter a recession this year with the global GDP growth at less than 1.2%. Globally, business confidence is declining and weak as we have seen in Singapore; governments and central banks are unlikely to be able to cushion a slowdown.
Equity and corporate bond markets will find support when Central Banks end their rate hiking cycles as valuations have improved after the market swoon in 2022.
45% of the respondents expect the US dollar to depreciate between 5% to 10% against the Singapore dollar while 41% of the respondents believe the greenback will drop by a similar quantum over the Chinese yuan. Based on currency fundamentals, the US dollar reached significantly overvalued levels during the second half of 2022. As the European Central Bank continues to tighten monetary policy and the Bank of Japan exits its negative rate policy, the attraction of the dollar will wane.
About the Investment Management Association of Singapore (IMAS)
The Investment Management Association of Singapore (IMAS) was founded on 22nd September 1997 by 10 major financial institutions in Singapore and has since grown to include more than 150 members. As a representative body of investment managers, IMAS spearheads the development of the industry in Singapore, by fostering high standards of professionalism amongst practitioners and creating public awareness of, and interest in the industry. We act as a forum for members, promote exemplary best practices, represent members collectively, educate investors, and improve standards of research and fund management expertise, as a collective drive to promote the investment management industry.
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