With cooling inflation, economists globally predict a soft landing in 2024, as indicated by 57% of the respondents in the IMAS Investment Managers’ Outlook Survey who expect stable global economic growth.
Thomas Kaegi, chairman of the IMAS Development Committee, said: "A majority of the survey respondents are anticipating growth to be steady this year with easing worries on inflation compared to last year. Concurrently, respondents expect the Chinese real estate market to stabilise, leading to a positive outlook for Asian financial markets in 2024.”
The annual Investment Managers’ Outlook Survey represents the views of some of the largest fund houses with combined assets under management of over $35 trillion. This year’s edition saw participation from 79 respondents, comprising mostly C-suite personnel of fund houses in Singapore.
The survey questions are updated yearly to capture the latest and most pertinent topics in the industry. Elections in Asia is a new segment for the 2024 edition with 60% of the survey respondents opining that the Taiwanese presidential election has the highest potential for surprise.
Jenny Sofian, chairman of IMAS, said: “This survey acts as a pulse check on the industry amid significant changes. This year, we are seeing an increasing demand for innovative products in alternatives and digital assets, overtaking ESG investments for pole position. This reflects an important shift in investor mindsets, led by the growth of millennial investors.”
ESG investment’s drop in the pecking order of priorities vis-à-vis last year has come alongside a period where certain types of ESG strategies have underperformed. This has dampened the demand for ESG investment products, particularly among retail investors. However, asset managers continue to identify ESG as one of the top three future drivers of investment growth and ways for them to differentiate their business, suggesting confidence that ESG demand will grow in the longer term despite recent setbacks.
Around 62% of respondents say that the integration of ESG principles into their existing operations is a top priority for their ESG strategy this year, likely a reflection of ongoing demand by institutional investors, as well as regulations to adequately consider ESG risks and opportunities in their investment process. The lack of data standardisation and the multitude of ESG standards remain the most frequently cited barriers to implementing their ESG strategy.
With the rising trend of innovative products, numerous fund managers are looking to expand their capabilities in advanced analytics, machine learning, and artificial intelligence. Fund managers anticipate that technology will primarily disrupt fund operations, the middle office, and the research industry. IMAS continues to further facilitate the digitalisation of the industry by bringing fintechs and asset management firms together.
"In 2024, we will be launching a Fintech directory which helps asset management firms discover tech solutions other industry players are using, as well as the newest innovations amongst our fintech members/partner firms."
On the end-of-the-year market calls for 2024, the US dollar is likely to maintain its current exchange rates against the Singapore dollar and the Chinese Renminbi at $1.37 to SGD and $7.32 to RMB, respectively. A significant 65% of respondents believe that the FED funds rate will experience a reduction.
Most respondents believe that the JP Morgan Asian Credit Index will end 2024 stronger with a 50 to 100 basis points drop in yield, while the MSC Asian Ex Japan and China Index are expected to rally by 10% to 20%. Overall, market indexes are anticipated to exhibit stronger performance in 2024.
Re-disseminated by The Asian Banker