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SINGAPORE: Economists worldwide believe that a soft landing is on the horizon, with 57% of respondents in the IMAS Investment Managers’ Outlook Survey foreseeing stable global growth in Asian financial markets in 2024.

The survey included perspectives of some of the world’s largest fund houses managing over US$35 trillion in assets. With 79 respondents, primarily C-suite personnel from fund houses in Singapore, the survey revealed a positive sentiment toward the Asian financial markets in 2024.

Thomas Kaegi, Chairman of the IMAS Development Committee, stated, “A majority of the survey respondents are anticipating growth to be steady this year with easing worries on inflation compared to last year. Concurrently, respondents expect the Chinese real estate market to stabilize, leading to a positive outlook for Asian financial markets in 2024.”

Notably, the Taiwanese presidential election emerges as a focal point in the heavy election calendar for Asia in 2024. 60% of survey respondents believe it has the highest potential for surprise.

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An emerging focus is on the alternative and digital asset class, identified as the top growth driver. The survey also signals a shift in investor mindsets, led by the increasing presence of millennial investors.

Jenny Sofian, Chairman of IMAS, highlighted the evolving demand for innovative products in alternatives and digital assets, surpassing the previous emphasis on Environmental, Social, and Governance (ESG) investments. She noted, “This reflects an important shift in investor mindsets, led by the growth of millennial investors.”

While ESG investments have dropped in priority, fund managers continue identifying ESG as a key driver of future investment growth.

Recent underperformance of certain ESG strategies has decreased demand among retail investors. However, 62% of respondents prioritise integrating ESG principles into their operations in 2024, emphasising ongoing institutional interest and regulatory considerations.

Barriers to ESG implementation include the lack of data standardisation and multiple ESG standards. Despite setbacks, asset managers express confidence in the long-term growth of ESG demand.

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With the growing trend of innovative products, fund managers are keen on enhancing advanced analytics, machine learning, and artificial intelligence capabilities. These technologies are expected to disrupt fund operations, the middle office, and the research industry.

IMAS aims to foster industry digitalisation by launching a Fintech directory in 2024, facilitating collaboration between fintechs and asset management firms.

In terms of market predictions for 2024, the US dollar is expected to maintain its current exchange rates against the Singapore dollar and the Chinese yuan.

65% of respondents predict a reduction in the FED funds rate. Market indexes are anticipated to show stronger performance, with expectations of a 50 to 100 basis points drop in yield for the JP Morgan Asian Credit Index and a 10% to 20% rally for the MSC Asian Ex Japan and China Index. /TISG