Malaysia poised to become a central hub for family offices in ASEAN

KUALA LUMPUR: Malaysia is poised to emerge as a key ASEAN hub for private wealth management advisory firms that serve ultra-high-net-worth families, also known as family offices, leveraging its stable financial markets and highly skilled workforce.

Juwai IQI global chief economist Shan Saeed said family offices are increasingly looking towards ASEAN due to the region's economic and growth stability.

Although managers may tend to look towards developed markets for family office capital, the upward trend in emerging markets is noteworthy, he said.

Shan shared insights into the substantial impact family offices are making on financial markets, with total assets under management (AUM) reaching a staggering US$6 trillion (US$1= RM4.75), underscoring their significant influence in the investment and wealth management landscape.

According to a London-based investment data company, Preqin Ltd, the number of family offices has more than tripled over the last four years, from 1,285 in 2019 to 4,592 in 2023.

There was a notable surge in the number of family offices across different regions, with North America, Europe, and Asia experiencing growth rates of 20 per cent, 17 per cent, and 22 per cent year-on-year (y-o-y), respectively, in 2023, while for the rest of the world, the number surged by 31 per cent y-o-y.

"The pivot of growth is shifting towards the East, driven by macroeconomic stability, strong infrastructure, a youthful demographic, and steady domestic demand," said Shan.

He noted that globally, investors are gravitating towards jurisdictions with stable financial markets, well-established regulations, a financially savvy workforce, and business-friendly economic policies.

He also pointed out that with growing uncertainty in the market, family offices can provide the much-needed liquidity and stability to the system which can boost market confidence.

Shan predicted that sovereign wealth funds and family offices would be pivotal in driving global financial markets over the next three to five years, particularly in light of the rapidly evolving financial landscape.

Countries like Malaysia, the United Arab Emirates (UAE) can benefit due to their stable financial market and strong rules and regulations in the economic system.

"I am bullish on the ASEAN, Gulf Cooperation Council (GCC) and Africa region, which collectively could generate an additional US$2-US$3 trillion in wealth over the next two to three years."

"In Malaysia, Labuan has also become an important offshore financial centre with low fee structure and procedures in place," he told Bernama.

Shan also highlighted the transformation in global financial markets over the past 16 to 17 years, with monetary and fiscal policies assuming greater importance in recent years.

"The ructions in the market are of a magnitude not seen in a decade. Governments are trying their best to maintain macroeconomic stability and to keep confidence in the economies to spur growth.

"Global investors are moving their capital where growth stability is paramount for many governments," he said.

He also noted the establishment of family offices in renowned financial hubs like Dubai, Hong Kong, London, Zurich, and Singapore.

He added that family offices are planning the most significant shift in asset allocation in several years, with geopolitics taking precedence over inflation as the primary concern, while regional investment preferences continue to evolve.

-- BERNAMA

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