Global financial services companies are on the brink of increasing consolidation, providing a boost for a sector undergoing significant change, according to SSB Citi Asset Management Group. United States-based equity research analyst Devashish Chopra was in Hong Kong yesterday to launch a global-financial services fund. Mr Chopra said the fund would 'capitalise' on the expected consolidation of companies in the sector. The 10 largest financial services companies in the world account for more than 10 per cent of the revenue stream in this sector, providing ample opportunity for mergers and acquisitions among divisions in a bid to boost market share, he said. 'We expect further consolidation among the banks and across the segments,' Mr Chopra said. 'We see consolidation as improving their returns.' The launch is timely as the popular market call is to overweight financials - such as leading banks and property groups - as US economic growth is slowing at a steady pace. Banks make up about 43 per cent of the fund, but the segments vary to include multi-line insurance, consumer finance, property and casualty insurance and real-estate holdings. Its country allocation is heavily weighted to the US at 34.3 per cent, with 12.8 per cent to Japan, 4.7 per cent to Hong Kong and 9.1 per cent to Britain. Mr Chopra said there were several drivers for setting up the fund, primarily demographics and disintermediation. 'Everyone knows the world is getting older . . . and it's also getting richer,' Mr Chopra said. 'As they age, their earnings pattern change. That has been since the mid-1980s in the US and companies that saw they were ahead of the times and an opportunity [for investors] really lies there. 'The same trends are now starting to play out in Europe and Asia. 'This trend means as people grow older and have more money, they will need a wider array of financial products to manage this wealth.' SSB expects the financial services sector will therefore benefit as corporations are no longer relying primarily on traditional borrowing to meet their capital needs but are branching out by issuing stocks and bonds. Still, doubters may fear the potential impact interest-rate fluctuations could have on a pool of global financial-related companies. In the early stages of an increasing rate of an upswing cycle, banks and property companies traditionally perform poorly on equity markets. Mr Chopra believes the sector will ride such influences in the medium to long-term, viewing any influences as short-lived as companies are focusing less on their rate-sensitive lending business. Barclays International Funds Asia director Roger Pyrke said the launch could be another example of fund-manager groups looking to sector funds rather than 'straight country funds'. Mr Pyrke said it was a theme, not unlike the recent introduction of technology, media and telecommunications funds earlier this year. 'It's another example of sector themes being in vogue,' Mr Pyrke said. The fund was at US$7.4 million as of June 30 after its inception on May 31.