by Aidan Shevlin, Head of Asia Pacific Liquidity Fund Management, and Ben Ford, Head of Global Liquidity Sales, South East Asia and Australia, J.P. Morgan Asset Management
Corporate investors in Asia are benefiting from a broader range of investment options than ever before. While there are major differences relative to Western markets, regulatory changes and market dynamics can have similar effects on both markets, regardless of geographical location.
Since the global financial crisis, the investment and regulatory landscape for money market funds has been undergoing dramatic changes – at perhaps the quickest pace in the past forty years. Especially, in the US and Europe, the combination of exceptionally low interest rates and continuous regulatory change has created uncertainty and investment challenges for money market fund (MMF) managers and investors alike. Asian money market funds have been relatively sheltered from the challenges facing Western money market funds. However, this does not mean they are immune to global and local regulatory reforms or rapidly changing local market dynamics. Investors in Asia should be aware of these challenges and the potential impact on their investment strategies and goals.
Investor perspectives – East versus West
Treasury teams working for Western multinational or Asian-headquartered businesses share similar investment objectives: security, liquidity and yield. However, there are some important differences in how they define and pursue these objectives. For example, as Ben Ford, Head of Global Liquidity Sales, South East Asia and Australia with J.P. Morgan Asset Management notes, “In times of crisis, while global companies would follow a ‘flight to quality’ by investing in US Treasury Bills, many Asian companies would pursue a ‘flight to familiarity’, investing with local institutions perceived as strong and reliable”.