Asset management industry on growth path

KUALA LUMPUR: The asset management industry in Malaysia has seen respectable growth despite the challenges over the years.

Following a modest decline in total assets under management (AUM) at end-2021, Securities Commission (SC) managing director Datuk Kamarudin Hashim said the industry’s AUM had grown to RM964.8bil in August 2023.

“This has surpassed the 2022 and 2021 levels despite the volatility that we have seen in markets globally this year,” said Kamarudin at the Federation of Investment Managers Malaysia Annual Conference 2023 yesterday.

He noted this growth came despite the tide that has shifted towards tighter monetary conditions globally and geopolitical developments which have led to greater volatility across capital markets.

According to Kamarudin, the asset management industry has grown steadily over the past 20 years with the recent growth of the AUM figure growing by more than 11 times to RM906.5bil in 2022 from RM79.8bil in 2003.

“This reflects the significant contribution of this industry to the Malaysian capital market in widening ownership of assets and generating returns on long-term savings,” he said.

“Among others, this period was also characterised by easy monetary and financial conditions which were some of the key drivers of asset prices upward,” he added.

Moving forward, Kamarudin said the performance of the capital market, including the fund management industry, will continue to depend on key global and domestic developments.

These include geopolitical developments, global monetary conditions and trade and corporate earnings.

Meanwhile, he said environmental, social and governance (ESG) concerns continued to dominate the agenda in the finance industry, including of asset managers.

Given this situation, he noted regulators have also needed to recalibrate approaches to emphasise adaptability and environmental consciousness.

“In the wake of the global pandemic, fund managers and regulators worldwide have undergone a profound realisation that the landscape of our world, both environmentally and within financial markets, has been irreversibly altered,” he said.

He said environmental considerations have surged to the forefront, with an acute awareness of the interdependence between planetary health and economic resilience.

“Simultaneously, financial markets have witnessed a paradigm shift, compelling fund managers to reassess risk models and embrace innovative strategies for a more resilient and sustainable future,” he said.

He pointed out that the SC had released the Principles-based Sustainable and Responsible Investment (SRI) Taxonomy for the capital market last year.

“Its aim is to provide a clearer classification of economic activities eligible for sustainable investment. With the release of the SRI Taxonomy, the SC will proceed to the next phase of its development with more granular and detailed guidance,” he said.

He also said the Advisory Committee on Sustainability Reporting (ACSR) is developing a national-level approach for the implementation of the International Sustainability Standards Board (ISSB Standards) in Malaysia.

“The ISSB Standards are geared towards providing a global baseline for sustainability-related disclosures by companies, namely, the investee companies that our funds will be investing in,” he said.

The ACSR is an inter-agency committee with members comprising Bursa Malaysia, Bank Negara, the Audit Oversight Board, the Companies Commission of Malaysia and the Financial Reporting Foundation.