Fund managers investing less in S-E Asia this year
SINGAPORE: South-East Asia is on track to receive less than half the private capital it lured from fund managers in 2016.
Investment across the region’s economies slowed to just US$896mil in the first half of 2017, compared with last year’s overall total of US$4.2bil, according to data from the Emerging Market Private Equity Association (EMPEA). Singapore attracted the most funds in the period, followed by Vietnam.
While the data can be lumpy and full-year figures are yet to be tallied, the slump in South-East Asia might be another sign that the region’s economies are losing out to China and India, which can accommodate cross-border deals rather than trap business in a domestic economy, according to global indus- try body EMPEA.
Fund managers included in the data are also competing with “stronger competition now from local conglomerates, family offices, Chinese corporate investors,” said Steve Okun, Asean representative for EMPEA.
Okun also noted that China and India would be more insulated by any negative effects from monetary policy tightening abroad, including the Federal Reserve’s balance-sheet unwind and continued interest-rate increases.
Venture Capital
There is some good news for Southeast Asia: venture capital is surging. Last year saw US$328mil of such investment pour into the region from funds, versus just US$76mil in 2012, according to EMPEA. That’s more than triple the pace of growth in overall capital investment during the same period.
Ahead of the Asean gathering in Manila this month, the investment data serve as a sort of nudge from industry for more regional economic integration.
At the top of that list would be further progress on state-owned enterprise reform and liberalisation in Vietnam, said Okun. Other integration efforts include trade, cross-border investment, workforce mobility, and logistics.
“There’s more opportunity here if there were regulatory frameworks within the countries that provided more investment opportunity,” Okun said. For now, “it’s a very fragmented market.” — Bloomberg