Singapore alternative AUM grew 16.9% in 2016-2017

Venture capital and private equity bolstered growth.

The efforts to grow Singapore’s private financing market are “showing signs of promise,” said Monetary Authority of Singapore (MAS) managing director Ravi Menon.

The MAS annual report revealed that for 2016 to 2017, Singapore’s alternative assets under management (AUM) grew 16.9% per annum, thanks to venture capital and private equity. Moreover, there are currently about 220 VC and PE managers in Singapore with the majority of PE managers focused on growth and buyout strategies.

“Around 85% of their investments are across Singapore and the region, targeting higher growth sectors such as consumer and retail, healthcare and IT,” Menon added.

Overall, Singapore’s AUM grew by an average of 12.7% p.a. over 2016 and 2017. Growth was robust across both traditional and alternative assets on the back of higher valuations and continued inflows to Asian markets.

“We continued to anchor the operations of global asset managers in Singapore, Menon added and cited AIA’s setup of its first group-wide regional investment hub.

Meanwhile, Singapore private banking AUM jumped by an average of 6.6% per annum as a growing number of Asia’s wealthiest families have set up Family Offices in Singapore to access investment opportunities in Asia.

Corporate debt issuance volumes also climbed by 22% per annum. Menon said much of the increase in debt issuances here was by Asian issuers—mostly from China, Indonesia and India—raising debt capital in Singapore for the first time.

“Green bonds are also gaining traction, with local and foreign issuers issuing over $2b of green bonds here,” he added.

For Singapore’s life insurance industry, net premiums grew by 16% per annum, thanks to Asian consumers demanding more savings and investment products in search of yield.

Non-life insurance business is, however, facing structural challenges and weak growth. Net non-life premiums grew by just 2% per annum. “Business conditions have been challenging globally, due to excess capacity and downward pressure on premiums,” Menon said.

Consequently, he said the MAS is making a push into alternative risk solutions such as risk pools and insurance-linked securities or ILS.

On the other hand, forex trading grew by 20.5% in 2016 but fell by 6.7% in 2017, mainly due to lower volatility in key currencies such as the Japanese Yen and some temporary trading desk turnover which has since been filled.

“We are making headway in our strategy to position Singapore as an e-trading hub for FX, facilitating better price discovery during Asian hours and better execution for players in the region,” Menon said.

He cited XTX Markets, a global FX liquidity provider, which has announced its plans to set up its pricing and trading engine in Singapore. He also said MAS is working with other key banks and e-trading platforms in the pipeline.