SINGAPORE (June 9): Institutional investors in the Asia-Pacific (APAC) region are the most confident about meeting their short- and long-term investment objectives amidst the coronavirus-induced market volatility, according to State Street Corporation.
In a statement released by State Street on Tuesday, the observation was derived from research conducted by CoreData in April 2020. The research study surveyed some 250 investment professionals, on the impact of the COVID-19 pandemic and how asset managers have handled the crisis. Of the 250, 16% are from the APAC region.
According to the study, about 38% of Asian institutional investors believe they will meet their short-term objectives, compared with just 24% globally. Some 85% of them believe they will meet their long-term objectives, compared to a mere 56% average worldwide.
In the same study, 88% of institutional investors in the APAC region are also found to have the most confidence in their asset managers’ ability to navigate the crisis. This compares to the 76% of respondents in the rest of the world. Only 15% of Asia Pacific institutional investors feel their managers have underestimated the impact and severity of the crisis.
This confidence from Asian investors may have come about due to the handling of the virus from some countries in the region, says Ian Martin, global head of Asset Owner Segment at State Street.
“The market volatility sparked by COVID-19 has clearly impacted the investment performance of institutional investors globally,” says Martin.
“However, it appears that Asian investors are more confident about meeting their investment objectives largely because some countries in the region have contained the impact of the virus and the pandemic is at a later stage compared with other parts of the world,” he explains.
“The findings suggest that asset managers in Asia Pacific appear to have kept institutional investors onside during the pandemic, reinforcing the finding that they have been less impacted than their global counterparts,” adds Martin.
In spite of the market volatility, half of institutional investors around the world are looking to increase allocation to equities in the next three to six months as they hunt for value.
In Asia Pacific, institutional investors are most likely to add exposure to private credit (40%), followed by equities (33%) and active investments (25%).
About two-thirds, or 66% of institutional investors around the world do not expect economic activity to return to normal before 2021 or even later.
Across the world, market commentary and strategic views have been viewed as the most important ways managers can help institutional investors. Investors in Asia Pacific in particular, have found that their managers’ use of technology to communicate important updates to be a very important form of support.
