Asset managers in Asia could see revenue double by 2022 on growth in China, Southeast Asia, says McKinsey
China accounts for about 37 per cent of assets under management in the industry today and is expected to grow at a pace of more than 17 per cent annually for the next five years, according to consulting firm
Revenue is expected to nearly double at asset managers in Asia over the next five years as more money from mainland China becomes available for investment, and as a rising number of affluent and high-net-worth individuals in Southeast Asia creates new opportunities for wealth managers, according to a new report by consulting firm McKinsey & Co.
The report comes as asset managers and banks with significant wealth management and asset management arms, including Credit Suisse, are increasingly turning to the Asian market as a driver for future growth.
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Asset managers in Asia reported US$66 billion in revenue last year, according to McKinsey. This number is expected to grow to US$112 billion over the next five years, the consultant said.
The region has been the fastest-growing asset management market in the past five years, accounting for 45 per cent of global inflows over the period, McKinsey said. Assets under management in Asia increased by 11 per cent on a year-on-year basis to US$16 trillion last year.
“The flows are not just coming from existing assets, but actually a lot of untapped pools across Asia,” said Anu Sahai, a senior adviser at McKinsey in Singapore. “That is a huge opportunity for asset managers to tap into. A lot of that is what drives this growth as well. It has been driving growth and will continue to drive growth going forward.”
The numbers there [in China] over five, 10 years can be very, very, very large
About 87 per cent of the US$110 trillion in financial assets in Asia is held outside the asset management industry, either as unmanaged assets in bank accounts by retail investors or high-net-worth individuals, or within institutions, such as pension funds or insurance companies, according to McKinsey.