The Growth Readiness Study from State Street Corporation has surveyed more than 600 global institutional asset owners, asset managers and insurance company representatives, with 23 per cent being from the Asia-Pacific region.
Two-thirds (67 per cent) of APAC investors were able to meet or exceed their investment performance targets over the last 12 months, in line with 70 per cent globally.
Among the region’s respondents, confidence in the one-year growth outlook only dropped 3 per cent since last year, with 42 per cent optimistic about meeting their growth objectives over the next 12 months.
However, they are less confident than their global counterparts, 49 per cent of whom are optimistic.
But for the long-term, optimism is substantially higher. Two-thirds of APAC investors are confident about their growth targets in the next five years, a 4 per cent increase from 2019.
Globally, 77 per cent of respondents are optimistic about the next five years.
Like their global counterparts, APAC institutions believe the top threats to growth in 2021 will be new regulations or taxation as a result of the COVID crisis, economic recession and rising geopolitical tensions.
“COVID-19 has dealt a blow to confidence across the board, but the survey shows that Asian and global institutions believe the long-term, five-year outlook is as strong as ever before,” Mostapha Tahiri, head of Asia Pacific at State Street said.
“This suggests most institutional investors are confident that they can rebuild stronger as they emerge from the disruption driven by the pandemic.”
Globally, institutions indicated their top growth priority for 2021 is improving investment performance (20 per cent of respondents).
In the APAC region, the priorities are more evenly spread. Around 16 per cent nominated improved investment performance, while 17 per cent are prioritising the acquisition of new clients in existing markets and 16 per cent feel cutting costs to improve operational efficiency is a priority.
Changes are also afoot for outsourcing. More than half (51 per cent) of institutional investors in the APAC signalled they are likely to outsource more activities that are not central to their strategic goals, while 58 per cent plan to consolidate the number of outsourcing partners to focus on deeper, more strategic relationships in the next 12 months.
Mr Tahiri noted the pandemic has ushered in new operational complexities for the investment industry.
“Enhancing productivity and technologies will be key priorities for growth in the coming year for asset owners, asset managers and insurance companies,” he said.
Appetite for using alternative data, such as social media, satellite images, transaction data and foot traffic, to improve investment intelligence is also growing – around two-thirds (66 per cent) of APAC respondents cited it as a larger priority due to COVID.
But 43 per cent said they were concerned they do not have the necessary capabilities and tools in place to make the best use of alternative data, with many looking to external specialists for help with analysis and understanding.
Sarah Simpkins
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
