The financial watchdog for the Asian city-state has delved into the numbers of its asset management sector, and the picture is mostly a bright one.

The relatively less liquid asset classes of property, venture capital and private equity may not have had it all their way in 2016 but figures issued by Singapore’s financial watchdog show they expanded faster in volume than the overall investment market last year.

Private equity/venture capital and real estate grew by more than 40 per cent and 80 per cent to S$136 billion ($99.3 billion) and S$69 billion, respectively. Assets under management overseen by traditional asset managers increased at a more modest pace of 4 per cent, according to an annual survey issued yesterday by the Monetary Authority of Singapore.

Indeed, private equity/venture capital and real estate saw the lion’s share of the 9 per cent growth in assets under management logged by Singapore. MAS views the rise in influence of these asset classes favourably, noting advantages in portfolio diversification and in target markets.

However, other recent data shows private equity fundraising has slowed sharply, possibly in part because the accumulation of uncommitted funds – aka “dry powder” – has blunted appetite for higher inflows from investors.

Private equity and venture capital assets under management last year grew to S$136 billion, while real estate grew by 80 per cent to $69 billion - making up a respective 5.2 per cent and 2.7 per cent of the city-state’s S$2.6 trillion asset pool.

“The fast-growing private market segment offers an opportunity for Asia’s entrepreneurs to keep their companies private for longer, and to grow with their companies for as long as they can,” MAS said in the report, entitled 2015 Singapore Asset Management Survey.

“This change in market structure has important implications for Singapore as an international capital market, and how Singapore can support Asian companies throughout their life cycle,” it said.

Singapore’s total assets under management grew by 9 per cent in 2015, below the average 10 per cent growth for the region. This is notably superior to the global rise of only 1 per cent, and marginally above 2014’s global growth of 8 per cent.

Singapore’s growth trends reflect the issues faced by investors across the region, and the globe, such as a continuing low interest rate environment and the need to find new investment avenues.

“As public market returns disappoint, more investors are seeking excess returns from illiquidity and credit risk premia in private markets," the report said.

AuM increase breakdown
Singapore saw 37 new asset managers in 2015. The number of registered managers stands at 628, according to the report.

Traditional assets under management grew by 4 per cent from a year earlier, against a 29 per cent rise in alternative assets. Hedge fund and REIT asset levels grew more modestly, logging 11 per cent and 7 per cent increases respectively to stand at $119 billion and $85 billion respectively.

Institutional investors accounted for more than 60 per cent of the funding sources for alternative asset managers. Corporates, pension funds and official institutions represent the bulk of investors. Banks only contributed 8 per cent to the total funding, alongside endowments, foundations and charities.

Last year, 80 per cent of the funds for the new assets under management in the city-state came from abroad, with 56 per cent coming from Asia-Pacific, 18 per cent from North America and 17 per cent from Europe.

Asia-Pacific continued to absorb a substantial amount of the funds, at 68 per cent of outflows, 39 per cent of which was invested in the ASEAN region. Europe and North America took 13 and 12 per cent respectively.

Equity markets’ share of Singapore’s total outflows decreased from 47 per cent to 43 per cent. Bond allocations increased from 20 per cent to 23 per cent and alternative allocations gained 2 percentage points from 2014’s 20 per cent.

MAS’s response
The regulator said it will continue to work with mainland China in supporting renminbi-based transactions. Like other financial centres, Singapore is competing for a share of business transacted in the Chinese currency, increasingly seen as a global reserve medium of exchange.

MAS said it will extend its cross-border renminbi initiative to the cities of Chongqing, Suzhou and Tianjin and allow companies based in the three cities to repatriate proceeds from renminbi bonds raised in Singapore.

The organisation also plans to double Singapore’s quota under the renminbi qualified foreign institutional investor (RQFII) scheme from RMB50 billion to RMB100billion.

As of September this year, 26 financial institutions have been RQFII-accredited, representing an aggregate quota of RMB59 billion.