Institutional Investors in Asia-Pacific are more positive about long-term growth compared to a year ago, according to the global custodian's annual survey.

A large majority of institutional investors in Asia Pacific are confident that they can rebuild stronger as they emerge from the disruption driven by the pandemic, State Street said in its «Global Readiness Survey 2020.»

Around 66 percent of APAC respondents said they are optimistic about their growth targets in the next five years, an increase of four percent since 2019, while globally, 77 percent of respondents are optimistic about the next five years

The study surveyed more than 600 global institutional asset owners, asset managers and insurance companies –  23 percent of which are from Asia Pacific – between September and October 2020 to understand the challenges they face in achieving their growth objectives.

Meeting Targets

Some two-thirds of APAC institutional investors said they met or exceed their investment performance targets over the last 12 months, in line with 70 percent globally. Among Asian respondents, confidence in the one-year growth outlook fell 3 percent since 2019, with 42 percent optimistic about meeting their growth objectives over the next 12 months – less than their global counterparts, 49 percent of whom are optimistic.

Among Asian respondents, the top growth priorities include improving investment performance (16 percent, vs. 17 percent globally), prioritizing acquiring new clients in existing markets (17 percent, vs. 13 percent globally) and cutting costs to improve operational efficiency (16 percent vs. 14 percent globally)

New regulations or taxation as a result of COVID-19 or an economic recess and rising geopolitical tensions, were cited as the top threats to growth next year.

Improving Efficiency

Fifty-one percent of Asian respondents said they plan to outsource more activities that are not central to the pursuit of strategic goals and 58 percent plan to consolidate or reduce the number of outsourcing partners to focus on deeper, more strategic relationships in the next 12 months.

«The crisis ushered in new operational complexities for the investment industry, which accelerated and intensified the search for resiliency and efficiency. Enhancing productivity and technologies will be key priorities for growth in the coming year for asset owners, asset managers and insurance companies,» Mostapha Tahiri, head of Asia Pacific at State Street, said in the report.