GLOBAL - China could become a "separate asset class" judging from institutional investors' growing interest in specialist mandates for the country, RCM has said.
Speaking at Allianz Global Investors' recent Asia conference in Berlin, Mark Konyn, chief executive at RCM Asia Pacific, said: "We see interest from large US and Canadian pension funds, Asian sovereign wealth funds, endowments and large foundations."
He said the requests had come mainly from large institutional investors that have the necessary governance structures in place for such mandates.
But he said RCM was also working with "an international consultancy" offering implemented consulting.
Konyn argued that the funds and indices currently available that include China are "not enough" to cover such a "complex" market.
"You only get exposure to five or six of the largest companies, and they are not representing the future," he said.
And while these large financials, petrochemical companies and technology businesses are seen by many investors as a proxy for capturing China's growing domestic consumption, Koyn said RCM preferred mid-cap companies with more direct exposure to the consumer sector.
Konyn said Asia was seen as a new source of beta for many large institutional investors, while other investors came to the region for opportunities to generate alpha to help them match their liabilities.
But he warned that Asia was "no longer cheap" and that it was not as easy to make money in the region as it was between 2003 and 2008, when "you simply had to be invested".
Konyn even suggested that China might become a separate asset class, leading to a "scramble for talent", as there might not be enough people to analyse the market and manage money in the region.
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