Future deterioration of US-China relations is the top concern in the industry, according to 79% of investment management respondents in Singapore polled in the IMAS survey.
Despite the expectation that a phase one trade deal will be signed this month, investment management executives appear to be pessimistic about further progress between the two countries.
US-China relations are closely tied to the next two macro concerns cited in the survey: “very weak global growth (66%)” and “weakening growth in China (53%)”.
Singapore fund groups are have particular reason to be concerned about slowing global trade: respondents said the top three overweights for their fund managers in 2020 are China (17%), India (14%) and the US (7%).
The collective worry from Singapore’s investment professionals is echoed by a forecast from Moody’s. Elena Duggar, associate managing director, wrote in the firm’s 2020 outlook that “overall global growth will remain lackluster amid a deceleration in the US and China, the main engines of the world’s economic activity”.
She believes advanced economies will slow and many emerging markets will grow below average “as global trade growth grinds to a halt.”
Similarly, Vanguard said shrinking world trade is putting the brakes on global growth “which restricts investment and hampers the spread of technologies and ideas that stimulate productivity. As such, we see growth staying subdued well into 2020”.
Schroders was a bit more optimistic. “Some form of trade deal with the US should also help to support a modest re-acceleration in growth over the course of the year,” the firm said in its outlook report.
ESG and margins
Separately, in terms of headwinds to business, the IMAS survey said “margin erosions, lackluster markets and poor returns by active investors compared to passive solutions, may impact the industry’s growth”.
At the same time, there are opportunities. Investor adoption of ESG products and a focus on product improvements, to include innovation and lower costs, will be the likely future drivers of growth over the next three years.
ESG adoption in investments, in fact, is now considered the top opportunity for fund groups compared to last year’s survey.
The annual IMAS 2020 Investment Managers’ Outlook Survey results are from 53 respondents, mainly CEOs & CIOs in investment management.
