SINGAPORE: While last year’s fears over persistent inflation have eased, 56% of Singapore fund managers have now shifted their concerns to rising geopolitical conflicts impacting the global economy and financial markets. However, 52% of respondents are confident that central banks will achieve a “soft landing”, with inflation concerns taking a backseat, according to the 2025 IMAS Investment Managers’ Outlook Survey.
The majority (75%) also expect the US Federal Reserve to reduce interest rates by up to 0.75 percentage points.
The survey gathered insights from 52 C-suite executives from some of the world’s largest fund houses managing over US$35 trillion (S$47.9 trillion) in assets.
A new question was added to gather fund managers’ views on the outlook for Asian markets this year. While 54% of fund managers expressed concerns over increasing trade tensions, 23% anticipated challenges due to a weaker Chinese economy. However, 19% remained optimistic that the market will perform robustly.
Despite varying views, fund managers are generally positive about Asian markets, expecting key indices like the MSCI Asia Ex Japan and MSCI China Index to end 2025 stable or stronger.
Meanwhile, 43% of Singapore fund managers expect the Straits Times Index to remain broadly unchanged, while 40% predict a 5% to 10% rise.
When asked about the top three threats to Singapore’s asset management industry this year, fund managers noted the shift towards passive solutions, margin erosion, and changing investor preferences.
They also anticipate strong demand for innovative technologies like advanced analytics, machine learning, and Generative AI (GenAI) as it improves productivity and reduces costs.
Jenny Sofian, Chairman of IMAS, advised, “Amidst geopolitical uncertainties and shifting market dynamics, firms must adapt their strategies to remain competitive while capitalizing on emerging opportunities. This includes leveraging technological advancements, embracing innovative investment solutions, and addressing evolving client demands.”
In the investment management sector, Fund Operations, the Middle Office, and Research are seen as most vulnerable to disruption by these technologies. Embracing these technologies will unlock new levels of value for firms, the report said.
Sustainability, though still important, has seen a six-spot decline in priority. Firms have developed baseline ESG competencies and are now focusing on implementing new sustainable asset classes to differentiate themselves.
The top three challenges in implementing ESG policies were the multitude of ESG standards, lack of data standardisation, and inconsistent frameworks across asset classes. Despite this, firms continue to prioritise ESG integration into their strategies, with growing interest in new sustainable asset classes.
In addition, this year, the US dollar is expected to moderate against the Singdollar to 1.34 USD/SGD, according to the report.
However, opinions on its movement against the Chinese yuan are split, with 37% predicting a 5-10% drop to 7.22 USD/CNY, while the remaining 63% expect it to stay the same or strengthen. Meanwhile, oil prices are forecasted to stabilise around US$72.40 (about S$99.19) per barrel. /TISG
Featured image by Depositphotos (for illustration purposes only)
