APAC's asset and wealth managers to hit US$29.6t in AUM by 2025

Shanghai is set to rise as an AWM hub along with Singapore and Hong Kong.

The asset and wealth management (AWM) in the Asia Pacific (APAC) region is slated for a faster growth than the other regions by 2025, according to an analysis by PricewaterhouseCoopers (PwC).

APAC AuM is expected to rise from US$15.1t in 2017 to US$29.6t in 2025. However, this growth could be uneven for developed markets in the region but fastest in the developing ones. The industry’s growth is attributed to the opening of economies in the region with an increasing number of international asset managers setting up their presence in the area.

Whilst Singapore and Hong Kong are the current assets management hubs of APAC, Shanghai is slated to be a major player in the industry due to China’s increasing elderly population.

“By 2025, we believe that the governing body of the NSSF [National Social Security Fund] will have centralised control of the provincial pension pots. Such a move will likely see provinces in surplus bail-out those in arrears which will be an expensive but necessary move.”

Also read: Hong Kong loses to Singapore in managing the assets of the world's wealthy

Furthermore, China’s Belt and Road Initiative is most likely to attract asset managers. “International asset managers, especially European managers with local offices, are well placed to step up their financing of these initiatives, and we expect this trend to grow in the coming years,” the authors added.

However, they also warned that ongoing demographic and technological changes, shifts in regulations, potential fee pressure, and fluctuating market growth would provide a harder time for asset managers. “Increased compliance, regulation, and technology costs will further squeeze profits across the region. Moves toward outcome-based solutions and the ever-growing share of passive strategies could push down the regional revenue pool. In the face of this, regulations are also providing asset managers with new opportunities,” they continued.

PwC assured that these challenges can be overcome by providing proven alpha, innovative product structuring and making sure client experience gives a strong element of their value proposition.