The Monetary Authority of Singapore (MAS) sees growth opportunities in the alternative investment space in Singapore despite public market downturns in the last year.
Lim Cheng Khai, executive director of the financial markets development department at Singapore’s central bank, says that the stimulus-fuelled market of 2021 has turned “slightly less sanguine”, as total private credit assets under management (AUM) grew 12% to about US$1.4 trillion ($1.86 trillion) in 2022.
Speaking at the Alternatives Investment Management Association (AIMA) Singapore Forum 2023 on March 28, Lim addressed the challenging financial global economic environment of today.
“The business environment was fraught with global geopolitical uncertainties, inflationary pressure, and rising interest rates…” he says. “Enter 2023, and the conditions have gotten even tougher.”
But Lim remains upbeat, citing that the alternative investment industry as a whole has remained relatively resilient.
Singapore’s alternative AUM grew faster than the overall industry AUM, at 30% y-o-y, with hedge funds and PE/VC accounting for two-thirds of the total alternative AUM in Singapore, he says. And as of end 2022, more than half of the top 50 global alternative asset managers and about 40% of the top 50 global hedge fund managers have set up offices here.
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On that note, Lim reiterates that the asset management industry is a key focus of MAS’ asset class strategy. He highlights a few key initiatives in the MAS’ Industry Transformation Map 2025 which are relevant.
These include setting up various fund structures, such as the Variable Capital Company (VCC) and Limited Partnerships, enabling Singapore to be a fund domiciliation centre of choice.
As well as the exploration of potential distributed ledger technology to facilitate the tokenization of financial and real economy assets, and developing ESG capabilities to close the emission gap by 2030.
“Within Southeast Asia, US$1 trillion in annual investments is needed per annum to close the emission gap by 2030, while current investment level is less than US$20 billion per annum. The investment opportunities are thus wide-ranging and yet to be fully tapped,” he says.
