UBS improved upon last year’s second place finish to take top honors in Institutional Investor’s 2018 All-Asia Sales Team.
The seventh annual ranking of the region’s best sales groups saw the bank swap positions with Credit Suisse based on eight attributes including quality of relationships, responsiveness, and providing the best global context for Asia (ex-Japan) portfolios.
Morgan Stanley and Citi remained at third and fourth, respectively, as voted on by participants in the 2018 All-Asia Research Team survey. The most substantial jump belonged to Bank of America Merrill Lynch, which moved up four spots from ninth to clinch fifth place.
The 2018 sales ranking debuts just before the inclusion of more than 200 Chinese mainland stocks into MSCI’s emerging markets benchmark. The addition starts in mid-June, and will further propel China into institutional investors’ purview.
Despite their small weighting in comparison to the total index, the China-A shares should not be underestimated, according to Jonathan Jenkins, Asia Pacific head of distribution services and prime brokerage at Credit Suisse. “It’s the first step along a road, which will radically alter investment flows into the region.” Credit Suisse puts initial international fund flow estimates for the domestic A-share market at $15 billion by August, with the potential to near $300 billion with full inclusion, which is expected to happen within a decade.
This changing landscape will likely have survey respondents—comprising more than 2,400 buy-side analysts and money managers at 940 firms managing about $1.5 trillion in Asian equity assets—looking to top-tier firms for guidance as market observers expect some volatility. Chris Hunt, Asia Pacific head of equities distribution at UBS, reported that the bank has made a number of new hires and continues to add capacity to its China A-shares team. “China A-shares will be an increasingly important component in the investment universe of our clients,” Hunt said.
Additionally, Hunt added, the direction of global interest rates and inflation are top of mind for clients in a world where central bank policy remains inconsistent. “Investors are seeking insight into how quickly monetary policy will normalize,” he said.
Despite a rockier global macro environment, Asia remains a region with strong growth and relatively stable geo-politics, according to Julia Raiskin, Asia Pacific head of investor sales and relationship management at Citi.
Trade war concerns, relations between China and the U.S. and the potential for reunification of the Korean peninsula are noteworthy to investors, she said, “but a global perspective on what is driving markets remains the most important and one that investors are increasingly placing a premium on.” Building a sales team to both satisfy future clients and attract talent is paramount to Citi, Raiskin added, and the bank is investing in technology and digitizing its workplace. “Automating processes has also meant that our salespeople can spend more time learning about their clients, problem solving, and building deeper relationships,” she said.
But all the technology in the world can’t replace what Raiskin believes are key characteristics of any good sales team: curiosity, flexibility, and diversity. “Diversity is important because we serve over 3,000 investor clients in the region. They all have different geographic footprints, investment processes, ambitions, and constraints,” she said. “It is a lot harder to imagine these scenarios than to assemble a team that has the variety of skills and experiences to match those of our clients.”
Jenkins concurred that the industry is in for a disruptive few years, especially as investors rely on fewer providers and the sell side develops “better and more dynamic” pricing models for research. “It’s likely there will be a further consolidation in market share during that time,” he said. “Paying a fixed dollar amount for an analyst’s time doesn’t reflect the way markets work in my opinion, and I hope we will get to more elegant solutions soon.”
But regardless, he said, “Quality relationships endure through good times and bad times, which means they need to be built on partnership and trust.”