Asian investors seek global opportunities at home
As a cash equities liquidity
drought across the region continues unabated, Asian investors
appear to be favouring global companies with secondary listings in Asia, research
from BNY Mellon Depository Receipts indicates.
The study uncovered a strong desire among institutional
investors in Asia to diversify more globally their equity holdings. Nearly half
(47%) plan to increase investments in companies domiciled outside their home
market over the next one to five years but they still prefer to trade within
“We are moving in a direction to increase the rate of
investment outside of Asia,” said a survey respondent from a Hong
Kong-headquartered investment firm. “We are striving to increase our global
The bank conducted 40 interviews with investors in Hong
Kong, Singapore and China, the total of which managed more than US$60 billion
in equity assets. Respondents included mainland Qualified Domestic Institutional
Investors (QDIIs), Hong Kong- and Singapore-headquartered investment firms, and
Hong Kong- and Singapore-based subsidiaries of global asset management firms.
BNY Mellon said for issuers, a regional dual-listing
increased both the local investor’s awareness of non-Asia-domiciled companies
and the likelihood institutions in Asia would invest in them. Around half the
investors surveyed (53%) said an Asian exchange secondary listing increased the
chances they would invest in foreign-domiciled companies.
“We’ve known for years that ‘home market bias’ to invest in
domestic companies is more pronounced among Asian institutions, and that
there’s a strong desire to correct that,” said Michael Cole-Fontayn, CEO of BNY
Mellon’s Depositary Receipts business.
When questioned by BNY Mellon, local Hong Kong and
Singapore investment firms were the most definitive in asserting a local
listing increased their likelihood of investing in a foreign company, with 57%
responding affirmatively and 62% saying a listing in Asia increased their
awareness of a company.
But within Asia, investors were agnostic about local
exchanges. Over half of the respondents questioned (61%) did not differentiate
between regional exchanges in Asia where foreign companies have secondary
“I do not differentiate between the Hong Kong, Singapore and
other Asian exchanges. The company simply has to be listed on one of the
regional exchanges for us to invest in it,” said a respondent from a Hong
Kong-based subsidiary of global asset management firm.