'Opportunity or Crisis'... Asia Fund Passport Nears, Divergent Outlooks

Financial Authorities See New Market Opportunities
Industry Fears Losing Home Ground to Australia and Japan
Investors Anticipate Expanded Choices and Quality

[Asia Economy Reporter Park Jihwan] There is a clear temperature difference between financial authorities and the asset management industry regarding the 'Asia Fund Passport' system, which will be implemented on the 27th. Financial authorities expect it to be an opportunity to pioneer new markets, such as expanding overseas exports of domestic funds. On the other hand, the management industry voices more concerns than expectations, saying they are in a situation where they may have to yield markets to Australia, Japan, and others.

According to financial authorities on the 20th, five Asian countries including Korea, Japan, Australia, Thailand, and New Zealand will implement the Asia Fund Passport system from the 27th of this month, allowing fund products to be sold across countries beyond national barriers. Funds registered like a passport in one member country only need to go through a simplified registration process when sold in other member countries. This will make it easier for domestic funds to be launched overseas, while overseas asset management company funds can also be easily sold domestically.

If introduced as intended, investors' asset investment opportunities will diversify, and asset management companies are expected to enhance their management capabilities. In particular, it is a positive aspect that it can provide an opportunity to move the relatively high proportion of savings funds in the Asian region to the capital market, compared to Europe or the United States.

However, the domestic asset management industry is concerned about losing market share immediately. Although the asset management industry's performance has been gradually improving recently, many companies have yet to establish themselves. Last year, the industry's operating profit was 982.6 billion won, a 20.5% increase from the previous year. However, among the total 292 companies, 101 posted losses, indicating that many are facing serious management difficulties.

Experts say that in the long term, success or failure will depend on the asset management industry's ability to secure competitiveness, but in the short term, it is inevitable to somewhat yield the domestic market to Australia, Japan, and others, as large competitors have already entered fiercely contested areas. In particular, Australia, which has the most developed financial industry among the participating countries, is expected to be the biggest beneficiary. The fact that the Japanese yen and Australian dollar among Japan and Australia have competitiveness in the international market compared to the domestic won could be a burden for domestic companies.

An industry official explained, "This system is expected to be a competition among two to three countries such as Australia, Japan, and Korea, but Australia and Japan are ahead in preparation and existing competitiveness compared to domestic companies, so they are likely to take the lead in the market," adding, "The key is whether we will join this group or yield the market."

From the investor's perspective, the range of choices will expand, and various related costs are expected to decrease. A financial investment industry official said, "It is similar to when imported cars first entered the domestic automobile market," adding, "From the consumer's point of view, they can expect a wider selection of products, quality, and competitive prices (returns)."

A Financial Services Commission official said, "Even Europe, which introduced the related system first, took more than 20 years to activate the system due to investor protection issues between countries," adding, "Just because the system is introduced does not mean overseas funds will immediately sell well domestically, so we will support domestic asset management companies to prepare well."

This content was produced with the assistance of AI translation services.