Asset managers upbeat on Asian markets, see opportunities for digital, private assets in S’pore: Survey

SINGAPORE - Fund managers here are generally positive about the long-term outlook of Asian economies and financial markets despite an increasingly fragmented global order shaped by geopolitical tensions and China’s tepid economy.

In Singapore, some see growth opportunities in digital and private assets in 2025.

An Investment Management Association of Singapore (Imas) survey of 52 asset managers from 52 investment houses found that these professionals were also cheered by cooling inflation and remain confident of a “soft landing” for the global economy, or a scenario where inflation eases without triggering a recession.

Most of the respondents, which collectively manage over US$35 trillion (S$48.1 trillion) in assets, were positive on the outlook for Asian markets in the longer term, with expectations for key indexes such as MSCI Asian Ex Japan and China Index and the JP Morgan Asian Credit Index to end 2025 broadly unchanged or stronger.

Some 43 per cent of respondents expect Singapore’s Straits Times Index (STI) to remain stable, with another 40 per cent expecting it to strengthen by 5 to 10 per cent.

They also see the US dollar maintaining its current valuation against the Singapore dollar at 1.34 and against the Chinese yuan at 7.22 for the rest of the year.

The poll found that 58 per cent of respondents identified increased demand for innovative products, such as digital assets, as a key driver of investment growth in Singapore over the next three years. Additionally, 48 per cent pointed to private assets, while 17 per cent highlighted environmental, social and governance (ESG) investments as key drivers.

Respondents also expect sustained strong demand for innovative technological solutions to reduce costs and increase productivity. Advanced analytics, machine learning and artificial intelligence (AI), including the use of generative AI, are among the top areas of interest.

When asked about the biggest threats to the growth of the asset management industry here in the next 12 months, fund managers pointed to rising interest in passive investments, shrinking profit margins and changing investor priorities as their main concerns.

Imas chief executive Carmen Wee told ST on Jan 13 that investment managers in the Republic are adapting to shifts in investor preferences as demographics evolve and millennial investors seek innovative and alternative products.

“We also see the industry leveraging growth opportunities in private and digital assets, transition finance and renewable energy while adjusting to a rapidly changing environment, where technological disruption will redefine both front and middle office operations,” she said.

The survey also found that sustainability has become a lower priority for investment management firms in 2025.

This shift implies that many firms have already established baseline ESG competencies and are now focusing on new asset classes to stand out.

The top three challenges in implementing ESG policies were identified as the multitude of ESG standards, lack of data standardisation and the absence of standardised ESG frameworks for different asset classes.

Despite these challenges, the integration of ESG into existing strategies remains a top priority for firms here. Notably, investing in new sustainable asset classes has increased since 2024, which signals a growing interest and commitment in this area.