Mutuals set for growth in Asia

Mutual funds will be the fastest growing market in the Asia Pacific region, where it is still regarded as an under-developed market.

Retail savings and investment assets in the Asia-Pacific region now totals US$ 9.22 trillion (AUD$18.1 trillion) according to a study by the Hong Kong branch of global market analysts, Datamonitor.

In its study of Australia, China, Hong Kong, Japan, Singapore, South Korea and Taiwan, Datamonitor says mutual funds outside of Japan are in an under-developed state, and totals US$680 billion (AUD$1.33 trillion) in assets.

Just how under-developed the mutual fund market is in this region becomes apparent when it is compared with the total in US mutuals, which stands at US$5.25 trillion (AUD$10.28 trillion).

Assuming relatively benign economic conditions prevail over the next three years, Datamonitor expects mutual fund markets to advance at an average rate of just under 10.5 per cent per annum, to reach US$859 billion (AUD$1.68 trillion) at 2004. Datamonitor says a combination of market deregulation and increasing investor sophistication will give mutual fund markets a leg up in this period.

The study also compared how investments were dispersed from country to country in the Asia Pacific area. It found that Australia and Hong Kong had the highest weighting of investments to high risk categories (equities and mutual funds) of 31 per cent and 46 per cent respectively. China and Taiwan, on the other hand, were the most risk-averse nations, with only 11 and 7 per cent of their investors opting for the risk end of the investment spectrum.

In terms of total investment assets, Australia sits at fourth in the list of countries in the region. Japan is by far the largest source of investment assets, with US$6.39 trillion, followed by China, with $1.26 trillion, then South Korea with $658 billion, then Australia with 397 billion. Taiwan, Hong Kong and Singapore bring up the tail, each with less than $300 billion in total investment assets.