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Modest Recovery in 2003
Financial Market Activity
Rise in Asian Dollar Market Lending . Box 12 – A Robust Financial System
Healthy Growth in Corporate Debt Market . Active Trading in Equities and Futures Market
Vibrant Treasury Market . Box 13 – The Singapore IPO Market
Mixed Performance for Insurance . Box 14 – Bank Loans to HDB Flat Buyers
Asset and Wealth Management – Impressive Performance
The asset management industry continued to expand as fund managers added more functions such as regional trading desks and centralised their back offices in Singapore. Total assets managed by Singapore-based financial institutions grew 35.3% in 2003 to S$465.2 billion, comprising S$254.6 billion of discretionary assets and S$210.6 billion of non-discretionary assets (See Chart 15). The increase in assets under management reflected renewed foreign investor interest in Asia, the centralisation of the management of regional portfolios in Singapore, and market appreciation.
There has also been an increasing interest in alternative investments managed from Singapore, including Real Estate Investment Trusts (REITs), private equity and venture capital and hedge funds. In 2003, listed REITs announced better-than-expected results and MAS continued to work on a more flexible regulatory environment for the management of such investments. Hedge funds also performed well, reflecting the increased sophistication of investors. The number of hedge fund managers grew 34% from 41 at end 2003 to 55 at end May 2004. Alternative investment managers were attracted to Singapore’s low business cost, conducive tax framework, transparent and sound supervisory framework, and investment-friendly environment.

Private banking also saw strong growth last year. Anecdotally, private banks have indicated to MAS continued strong performance both in terms of asset gathering as well as profits and revenues. Asia is currently the fastest growing market in the world for private wealth services. Demand for advice on estate and succession planning has been on an increasing trend. Employment in the industry has been strong with the creation of new jobs in relationship management, product specialisation as well as mid-office positions.
Enhancing Risk-focused Supervisory Approach
Box 1 – Fostering a Sound and Progressive Financial Services Sector
Enhancing MAS’ Supervisory Capabilities
Box 2 – Stress Testing of Life Insurers
Box 3 – Streamlining Inspection Function
Thematic Inspections to Improve Surveillance