Challenges ushered in by new era
By RAY BASHFORD
THE South China Sunday Morning Post is again pleased to be presenting the Fund Manager of the Year annual awards in association with Micropal. The awards night has become a fixture on the calendar of the fund management industry, reflecting the importance of the event as an occasion to recognise achievement within the sector.
The shocks and the changes which have rippled through the industry this year will give added interest to the evening of March 6 when the awards will be made at the Island Shangri-La Hotel.
While these awards highlight the performance of individuals and teams, they also aim to underline the importance of the entire industry and the role it is playing in promoting Hong Kong as a regional business centre.
This role will take on added significance as we move into a new economic and political era. For this reason the industry's ability to advance all aspects of its conduct will be highly influential in shaping Hong Kong's international reputation in financial markets.
The internationalisation of the Hong Kong funds industry is well documented. The most recent estimates conclude that 90 per cent of international firms use Hong Hong as their regional headquarters and about 70 per cent of the US$94 billion of managed assets are sourced from overseas clients.
However, this is a fiercely competitive environment for the retail and institutional fund managers and alternative regional centres are constantly in pursuit of firms seeking to cut costs and increase efficiency.
Hong Kong cannot be seen in isolation from the rest of the region. The process of liberalisation of the industry and the increasing potential of the market is spreading through all Asian countries, and Hong Kong must be ready to adapt to the altering conditions. These changes are most pronounced in Japan and Singapore, which have the biggest number of foreign funds companies after Hong Kong and the scope to prove formidable competitors.
The tremors experienced this year did nothing to enhance Hong Kong's reputation but the process of tightening internal controls and strengthening self regulation of the industry give reason for confidence that holes are being plugged.
The reforms are already being tested as the industry strives for growth. However, the onus on the industry to maintain high standards of housekeeping will never be stronger than in the years ahead as the Mandatory Provident Fund gets up and running.
As has been demonstrated during the arduous process to get approval for the fund's creation, there remains a strong body of opinion opposed to it which will be quick to attack shortcomings during its formative stages of development.
The case for the establishment of the fund has been well aired and, as last Friday's vote in Legco showed, it has won out against other models which have obvious flaws. The MPF is but one of the many challenges which the March 6 winners will have to confront to ensure the expansion of this vital industry.