Selling Irish fund expertise to open and closed markets

Asia Briefing:Irish Funds Industry Association (IFIA) chief executive Pat Lardner was in Hong Kong, Taipei, Malaysia and Singapore last week on a mission to convince southeast Asia’s asset managers that Ireland is the go-to place as they seek to internationalise their business.

“We want to show them the strength and real substance that exists in Ireland as both a domicile and a service centre for international funds. We have a lot of work to do as an industry and as a country.

“The awareness was pretty good. One of the Hong Kong funds was already in Ireland; another was redomiciling a Cayman Islands fund to Ireland. They were aware of the product framework that exists in Ireland,” said Lardner.

China carries major economic heft in the region and, despite being the world’s second biggest economy, the country’s fund management business is still seriously underexplored and underdeveloped. China may be home to the world’s biggest population, but the fund management industry is probably only 4 per cent the size of that in the US.

During his visit to the territory, Lardner met eight of the top 10 mainland Chinese fund managers, which between them account for 41 per cent of all the mutual fund assets on the mainland. These included some of the big names in asset management in China, including China Asset Management, E Fund, Harvest, China Southern Management, Bosera, GF and HuaAn Fund Management.

Hong Kong, with its strong rule of law and financial services expertise, remains the way into mainland China’s asset management market.

The IFIA’s local representative is Conor O’Mara, head of the Irish Chamber of Commerce Financial Services Committee, who said it had been a “great week” for the Irish funds industry.

The last data available, from 2007, shows they were running 170 billion yuan (€20 billion), a figure that is sure to have increased significantly since as the financial services industry has expanded massively since then.

According to PricewaterhouseCoopers, the assets under management of foreign fund managers in China is 2.3 billion yuan (€290 million), which is a relatively low figure when you consider that the AUM of US mutual funds last year were $11.6 trillion (€9.1 trillion).

Z-Ben Advisors estimates that the total market size of financial products in China, as at 2010, was worth 92.5 trillion yuan (€11.4 trillion), of which 71.8 trillion is in bank savings. Z- Ben expects mutual funds to show the strongest growth among all financial products in China by 2015, reaching 6.9 trillion yuan (€850 billion).