Vietnam is a potential bright spot

Asset Management Industry Shift: Vietnam is a Potential Bright Spot

The global asset management industry is shifting from traditional markets to emerging markets, in which Vietnam could become a new “gold mine”.

The Great Shift

According to TechsciResearch, the global wealth management (WM) market is valued at $1,100 billion by 2022 and is forecast to grow at a compound annual growth rate (CAGR) of 9.85% through 2028.

For many years, the WM market has been concentrated in developed countries, serving the upper class. But financial instability and sluggish growth in major economies have created a major turning point for the asset management industry. Western Europe, once the “holy land” of the global asset management industry, is in a prolonged period of difficulty. Meanwhile, North America, although showing signs of recovery after Covid-19, has yet to regain its previous growth momentum.

The International Monetary Fund (IMF) forecasts that this year's GDP growth rate of the developed economic region (including Western Europe, North America...) will only reach 1.7% - much lower than the growth rate of emerging markets (4.2%) and the global GDP growth rate (3.2%).

The above developments have caused a major shift in the WM market, with capital gradually flowing into emerging markets, especially in Asia (especially Southeast Asia). This shift has significantly changed the market structure and the importance of each region.

According to the World Economic Forum (WEF), Southeast Asia is one of the fastest growing regions in the world, with an average GDP growth of 4.6% in 2023 and 4.8% in 2024. The rise of emerging economies in the region, notably Vietnam, Indonesia, the Philippines and Thailand, is attracting the attention of global asset managers due to their impressive economic growth and the huge potential for growth of the middle and upper classes. In addition, there is an intergenerational wealth shift, the emergence of a new generation of tech-savvy investors and the development of WealthTech companies (combining technology and asset management).

In Southeast Asia, Thailand has emerged as one of the most developed asset management markets in the region. According to McKinsey, the Thai WM market is expected to grow strongly over the next five years, with total assets under management expected to increase by 10% per year. With a size and population structure that are similar to Vietnam, Thailand is considered a model for the development of the WM industry in Southeast Asia.

Vietnam - A potential new bright spot in the Asian region

With the fastest growing economy in the region, along with technological prowess and untapped prospects, Vietnam offers many opportunities for domestic and foreign investors in the WM market.

According to research by the UK-based Centre for Economics and Business Research (CEBR), Vietnam is predicted to become the second largest economy in Southeast Asia by 2036. This development is supported by positive changes in regulations, high-quality human resources and the rise of the super-rich class, creating favorable conditions for the formation of a leading asset management system in the region.

McKinsey's report on the asset management industry in Vietnam shows that the Vietnamese financial market has developed significantly in recent years. It is forecasted that by 2027, the personal financial asset (PFA) market in Vietnam will reach about 600 billion USD, with a growth rate of 11%/year compared to 360 billion USD at the end of 2022.

The amount of personal financial assets under management (Wealth Management) in Vietnam in 2022 will reach 45 - 52 billion USD. Revenue from asset management will reach 500 million USD.

Assets under management (AUM) as a percentage of personal financial assets (PFA) are also increasing, but the increase will vary by customer segment. In particular, the high-income customer segment is forecast to achieve outstanding growth, with AUM increasing 5.5 times by 2027. Meanwhile, the high-net-worth customer segment (HNWI) is not far behind, with AUM expected to double by 2027.

This is a golden opportunity for asset management firms to tap into untapped wealth by focusing on attracting new affluent clients and shifting idle cash flows from cash and deposits to wealth solutions such as investments and insurance.

However, the biggest challenge is the lack of talent in this field, especially in terms of financial advisory skills and market knowledge. In addition, Vietnam's digital infrastructure, despite its high smartphone penetration rate, is not yet fully developed to support digital asset management services.

McKinsey believes that if current problems are overcome, banks, insurance companies, securities companies and asset-related fintechs can prioritize the development of the asset management sector and exploit this huge market potential.

Adapt to change

The second Vietnam Wealth Advisor Summit (VWAS) 2024 - the only forum organized by Investment Newspaper and the Vietnam Wealth Advisor Community (VWA) will take place on Thursday, June 6, 2024, at Pullman Hotel, Hanoi.

VWAS 2024 has the theme “Adapting to Uncertainties”, with the participation of many prestigious domestic and international speakers. The forum will discuss in depth the global economic scenarios and Vietnam in particular; opportunities, the proportion of investment assets to achieve efficiency in the portfolio and focus on the stock portfolio.

Source: https://baodautu.vn/su-dich-chuyen-cua-nganh-quan-ly-tai-san-viet-nam-la-diem-sang-tiem-nang-d216072.html