Asset managers and asset owners who have built up their positions in Asia during the Covid-19 crisis will find more opportunities when the pandemic is over. The growth momentum in the region is bound to accelerate post-Covid, and it is important for institutional investors to take a longer-term view, to look beyond the current pandemic.
“In terms of opportunities post-Covid, I see a number in those companies whose businesses are propelled by Covid-19, such as e-commerce, virtual delivery of content, and traditional businesses that were able to transform amid the pandemic and boosted their revenue and margin,” says Ben Chan, senior managing director, Asia-Pacific, at Ontario Teachers’ Pension Plan, during a panel discussion at the recent Asian Financial Forum. He notes that the pension fund invested in data centres, autonomous driving and traditional food business that transformed completely into a delivery model last year.
Chan also favours businesses that have proved resilient during Covid-19. “As a result, we believe they will be more valuable in the long term,” he says. “Examples of this are a pathology business that we invested in in New Zealand and a dental business that we invested in in the same region.”
“The third category [covers] those that currently are suppressed, but will eventually recover when the pandemic is over,” Chan says, although he notes that picking the right companies is challenging. One example is his group’s investment in the gym business.
The last category that interests Chan involves businesses that will come out after the pandemic. “It could be new energy solutions in light of the awareness around climate change and healthcare solutions,” he explains. “And there will be some other assets that might otherwise not become available, but because of structural changes caused by Covid-19, (they have become available), you should look at that.”
In terms of business model, Covid-19 not only posed challenges to asset managers but is also providing opportunities.
Speaking at the panel discussion, Francois Monnet, managing director, head of private banking for North Asia and chief executive of the Hong Kong branch of Credit Suisse, addresses a few challenges such as managing relations with clients becoming more complex and managing staff anxieties and the new norm of working from home. “But looking back, opportunities were bigger,” says Monnet, noting that both productivity and client engagement have increased.
Although the asset management industry cannot fully rely on digital channels, especially for the private banking sector, new ways of running the business have caused a shift of mentality.
“In Asia, over time there has been a sense of presentism. Being in the office was the right thing to do. But [the importance] is shifted towards more on the outputs rather than the inputs – not about being in the office but what you deliver to the clients, etc.,” says Rajeev Mittal, managing director, Asia-Pacific ex-Japan, at Fidelity International. “I do think the trust organizations have in their colleagues is going to be a big positive going forward,” Mittal says.