Fund managers brace for trade tensions, weaker China: survey

Over 1 in 2 fund managers are concerned about geopolitical conflicts.

Whilst inflation fears have eased, Singapore fund managers are now facing a new issue: geopolitical conflicts and trade tensions.

One in two (56%) of Singapore fund managers are bracing for the impact of geopolitical conflicts on financial markets and the global economy, according to the Investment Managers’ Outlook Survey by the Investment Management Association of Singapore (IMAS), published on 8 January 2025.

Separately, 54% of respondents expressed concerns about heightening trade tensions, whilst 23% expect markets to be affected by a weaker China, IMAS found.

Three in four (75%) of respondents, meanwhile, expect the US Federal Reserve to cut rates by up to 0.75 percentage points in 2025.

For the asset management industry, the top three threats named are accelerated flows to passive solutions, further margin erosion, and shifting investor preferences.

To address these threats, companies are advised to broaden their offerings and embracing new tools like generative AI to unlock new levels of value.

“Companies address the ongoing threat to their margins by broadening their offering to new asset classes such as private markets as well as expanding into additional distribution channels,” said Thomas Kaegi, Chairman of the IMAS Development Committee.

“These trends reflect an industry in transformation, driven by a commitment to meet evolving client demands and capitalize on future growth opportunities,” he added.

For end-2025 forecasts, fund managers expect the US dollar against the Singapore dollar to moderate to 1.34 USD/SGD.

Opinions are divided for the Chinese yuan, with 37% of respondents anticipating weakening of around 5% to 10% at 7.22 USD/CNY, whilst the remaining 63% expecting the yuan to remain unchanged or strengthen.

Oil prices are projected to stabilise at approximately US$72.40 per barrel, the survey found.

IMAS did not disclose the number of respondents to the survey.

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