Spring 2011

SPONSORED PROFILE: Diving in

Flemming-MadsenThe Asian region is home to significant unlocked investment potential. T Rowe Price anticipates that its commitment to the region will be rewarded when local investors begin venturing out of their domestic markets. Local Asian investors are looking beyond their home shores to foreign investments. Global investment manager T Rowe Price put down strong roots in the region and is getting ready to dive into the big pools of money expected to flow from this client group.
The firm has been active in the Asia Pacific region for around 10 years and is poised to take full advantage of the burgeoning local investor base across various Asian countries including mainland China, Taiwan, Australia, India and Japan. On the mainland
In the medium to long-term, Greater China is one of the most attractive markets for investment managers target Asia. The untapped potential of the Chinese investors has a significant pull and this has not gone unnoticed by T Rowe Price.
But the firm is not planning on swooping in on this market unannounced. It has had business in China for the last four and a half
years.
In November 2006 , T Rowe Price was  among the first foreign managers  appointed by the National Council for Social Security Fund (NCSSF) of the People’s Republic of China.
The  NCSSF handed the firm a US equity mandate. This was the first time the fund partnered with non-Chinese investment managers.
This appointment was the first step for Chinese investors to look beyond their domestic borders and Flemming Madsen, director, head of Asia Pacific at T Rowe Price believes this trend is due to take off.
He says: “Very few institutions in mainland China can invest outside of China itself and we think again that over the next couple of years this is going to change. That’s a big pool of money that will be looking for
overseas investments.”
Since its appointment by the  NCSSF, T Rowe Price has continued to build institutional relationships and plan to continue doing so. Madsen says: “We have a very focused and dedicated greater China team led by Philip Lin. We’ve just hired an additional person, Cathy Xu,  in our Hong Kong office to further build institutional relationships in  Greater China.” Down under
Another place that has huge potential for global investment managers is Australia. The large pools of assets created as a result of the country’s superannuation laws, that is, obligatory membership in a pension schemes, are undoubtedly appealing to a firm like T Rowe Price.
The firm’s commitment to the region has been strong and the most recent testament to that was the appointment of an associate director of research for Australia , in addition to last year's hire of Randal Jenneke as head of the firm's Australian equity capability.
In mid-March 2010, T Rowe Price expanded its equity investment research capabilities in its Sydney office by hiring Viral Patel, an experienced analyst of Australian equities.
Plans also are underway to soon add three more equity analysts to the Sydney office, where the firm has had an institutional sales and client service team since 2004.
Madsen says: “Australia is another key area for us. We’ve been targeting superannuation funds for the last six years. Like the Chinese institutional investors, they are looking for expertise in global markets.
“We’ve had some very good business, particularly in the global equity space.”
He explains that the superannuation funds have largely been looking for global developed and emerging markets equities expertise from foreign investment managers. But now, their interest in other asset classes is being piqued.
Madsen says: “On the fixed income side, the superannuation funds have large exposure to their domestic markets, for obvious reasons. But now I see more international fixed income exposure in the pipeline.”
As the funds branch out into different asset classes and exposures, Madsen explains why T Rowe Price is in a good position to capture some of that business.
“We built a strong base of institutional relationships in Australia and we’ll continue to offer more strategies to these institutions as the investors begin to look for more specific, or specialised investments,” he says. Japan
Another Asia region Madsen says is attractive in terms of latent investor potential is Japan.
He says: “We’re active in the Japanese institutional market and have we’ve been servicing corporate pension funds in the country for the last seven years.
“The Japanese mutual fund market has developed very well and over the last few years we’ve seen strong growth in our business there. We continue to see it as a very promising market for us. It’s a big pool of money and there is a lot of interest in investing outside of Japan and using the kind of expertise that we can offer.”
The firm established its joint venture in Japan with Sumitomo Bank and Daiwa Securities in 1999. Madsen says: “We’ve been active in Japan for the last ten plus years. We sub-advice mutual funds sold to Japanese retail investors, by various distributors.  You can say that we bring our investment expertise to their distribution power.”
T Rowe Price is keen to highlight that being successful in Asia is not about trying to have a finger in every pie. Good match
Madsen says: “We have to make sure that there is a good match between what the investor is looking for and what we can provide.
“The Asian region is made up of many different countries, regulations, languages and cultural biases. Therefore, you have to go to each market individually and look at all the preferences of the investors there.”
And T Rowe Price takes this exercise very seriously. “We try to be very focused on what we do and gather sufficient market intelligence to make sure there is a good match. If there isn’t a good match between what we do and what investors want, we might not go into a market, despite sizeable asset base. We don’t need to be in every single market in the region.” ©2011 funds global

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