S'pore's managed assets grow 63%

S'pore's managed assets grow 63%

SINGAPORE (Reuters): Singapore's fund management industry saw total assets under management grow 63 percent to S$246.2 billion in 1999 on the year as firms flocked to set up shop in the city state.

"We have seen a net inflow of funds into Singapore, like many of our competitors. This because of the strong rebound in Asian markets and more fund managers are setting up shop in Singapore," said Peter Hames, fund manager at Aberdeen Asset Management.

Hames said Singapore's standing as a fund management center has grown thanks to central bank moves to free up its compulsory pension scheme, the Central Provident Fund (CPF), the government putting out funds for management and regulatory changes.

The number of investment professionals in the industry rose 20 percent in 1999, as the number of asset management firms rose to 191 against 169 the year earlier, a survey by central bank the Monetary Authority of Singapore shows.

"This significant growth in assets can be attributed not only to upward asset valuations but also to the inflow of new funds," Lim Hng Kiang, minister for health and second minister for finance told investment managers at a meeting on Thursday.

Lim announced key survey findings.

He said the central bank plans a new licensing framework requiring market players to hold a single license from MAS in order to provide a range of financial services.

The licenses would lower barriers to entry for the securities market and spur the growth of new products, Lim added.

The MAS survey showed that the number of large players managing discretionary assets of more than S$5 billion has increased to 11 from three a year ago.

Unit trust assets under management almost doubled to S$6.8 billion in 1999 from S$3.6 billion the previous year. Net subscriptions of unit trusts for 1999 amounted to about S$1.5 billion, or growth of triple the previous year's.

"From a U.K. perspective, Singapore is the first choice for fund managers over Hong Kong now -- for a long time, it had only been Hong Kong," Hames said.

Aberdeen was among the first U.K. fund managers to set up shop in Singapore in 1992 and now manages S$4 billion.

Despite the good growth in the Singapore fund management industry, it is still much smaller than Hong Kong.

Data from Hong Kong's Securities and Futures Commission show total assets under management by 150 companies in 1999 totaled HK$3.5 trillion (US$449 billion), or about thrice those in Singapore.

But fund managers said Singapore's growth will remain strong with more deregulation ahead and the lure of government funds.

A key attraction for foreign funds has been the government's plan to place out some S$35 billion of its own funds -- S$10 billion from MAS and S$25 billion from the Government of Singapore Investment Corp. -- for external management.

Of the S$10 billion in MAS funds, the central bank has so far earmarked S$4.1 billion for external fund mangers and expects the full amount to be placed by the first quarter of 2001.

The GIC had placed out S$10.8 billion out of the S$25 billion as of the end of 1999.

Ian Simmonds, senior vice president at Principal Capital Management, said his company aimed for a greater presence in Singapore and hoped eventually to manage some government funds.

Simmonds plans to relocate to Singapore by the month's end from Sydney, where he is now based.

Another area of growth for private fund managers is an alternative pension scheme, the Supplementary Retirement Scheme proposed by the Singapore government.