Central banks are only part of the solution.

Disruptive influences are here to stay, investors should “look to the evidence”, says global investment manager

“Gone are the days when central banks could pull the levers and set global economies on the right course. Their actions still have an effect, but they have clearly failed to resolve many of the fundamental problems facing world economies post GFC.”

This is the view of John Birkhold, Partner at global investment manager, Origin Asset Management, who yesterday warned investors to take new technologies seriously in their search for investment performance.

Following the GFC, central banks adopted policies which, in Origin’s view, failed to address the real issues facing many developed economies. Aggressively accommodative monetary policy, like quantitative easing in the US, may have staved off disaster in the short term, but is likely to have far-reaching, longer term negative consequences in many cases.

“Together, low interest rates and ample liquidity have allowed many struggling economies to put off addressing the difficult re-structuring decisions that need to be made. And more than that, I would argue that the actions of central banks are in fact creating some of the same economic conditions which led to the GFC in the first place,” Mr Birkhold said.

Nonetheless, investors understand that they must make their calls based on the world they are faced with and not the world they would like to have. And if innovation and disruptive technology are here to stay, the challenge lies in identifying the companies most likely to create wealth for their shareholders going forward.

According to Mr Birkhold, by its very nature, disruptive technology is deflationary and, as with all major change, there will be both winners and losers as a result.

“The consumer often wins as technology becomes better and cheaper, whereas previously profitable companies see barriers to entry diminish and previously profitable markets dissipate. This is particularly true for organisations stuck in the middle of flattening business environment and find themselves disintermediated,” he explained.

Mr Birkhold went on to say that relying on actual evidence and analysing individual companies using a bottom-up approach is the best way to trying to identify long term winners. Origin is invested in a number of areas where current trends appear supportive, including:

• Home builders in the UK, which continue to be relatively cheap while exhibiting strong underlying fundamentals.
• Parts of the global auto industry also appear attractive thanks in part to increasing demand for cars in some markets, as well as technological innovation.
• Information technology firms in industries such as smart phone supply chain, the “internet of things” and cloud-based software providers.
• Bio-technology, which is being helped by aging demographics globally and also from significant advances made in the treatment of chronic disease such as Hepatitis C and prostate cancer.

Mr Birkhold concluded by saying that investors should not fixate on central bank manoeuvrings and instead should try and identify firms that will be able to survive and even prosper in the intrinsically deflationary environment that the developed world is likely to face for the foreseeable future.

“And for my money, firms that are able to adapt and innovate will be the ones that will most likely create significant wealth for their shareholders going forward,” Mr Birkhold said.

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Income story: is growth and returns possible?

Regardless of whether improving economic data prompts the Reserve Bank of Australia (RBA) to keep official rates on hold tomorrow, interest rates will remain at historic lows. So should income-seeking investors consider moving out of dividend stocks and seek capital growth as global economies pick up?

“Worldwide economic indicators are definitely improving, and with the property market also showing signs of life, most analysts would be surprised to see the RBA cut rates next week,” says Stephen Thornber, Portfolio Manager, Global Equity Income, at Threadneedle Investments. “In fact, if global economies continue to improve, at some next year point rates may even be lifted.”

Nonetheless, Mr Thornber says that a dividend income-based strategy can offer investors both a high yield and the potential for capital growth.

“Investing in dividend stocks doesn’t have to mean that the potential for capital growth is compromised,” he says. “In fact, the last two decades have shown that investing in companies which pay high dividends actually results in superior total returns.”

Talking about the effects on income-based strategies of better global economic data, Mr Thornber said that by focusing on dividend paying companies that are growing, investors can participate fully in rising markets.

“Traditionally income strategies have been a defensive investment, but a new generation of funds have been successful in both protecting capital during market weakness, while keeping up with rising markets – as we have seen this year.”

Equity income investing has grown in popularity as retirees seek alternatives to bonds and term deposits, which are less attractive as inflation rises.

“Equity income provides a good hedge against inflation, which is particularly valuable in an environment of quantitative easing as we have seen in recent years,” he explained.

In a low-growth world companies are using dividends not only as a means of rewarding investors, but also to demonstrate financial strength and draw new investors.

“A robust balance sheet means that a business can sustain rising dividend payments, weather potential economic storms, and invest in profitable growth,” Mr Thornber said.

Mr Thorber continued by saying that the volatility risk of owning equities can, to some extent, be offset by being prepared to invest for the longer-term, allowing the benefits of a rising stream of income to drive value creation.

“The right equities can deliver both yield and growth with manageable levels of risk,” he said.

At Threadneedle, meeting companies and conducting fundamental research lies at the heart of the stock picking process. This bottom-up stock analysis is then combined with thematic insights and overlaid with macroeconomic factors gleaned from colleagues working across all investment classes.

Mr Thornber concluded by saying that he expects continued growth in the global equity income sector in the years ahead, as the dividend culture gains momentum in world markets, and an ageing population continues to focus on yield.

“With the right stocks, investors should absolutely be able to expect strong and consistent income as well as capital growth as markets improve,” he said.

The Threadneedle Global Equity Income Fund (Unhedged), an Australian registered investment management scheme which invests in the actively managed Threadneedle Global Equity Income Fund, is available in Australia via Certitude Global Investments.

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Looking to long-term thematic investments strategies.

Global equities fund manager, River and Mercantile Asset Management LLP (R&M), believes Australian institutional investors could be missing out on global companies likely to benefit from structural trends due to an over-reliance on conventional global equities investment styles.

The UK-based fund manager’s investment process layers classic business fundamentals and financial valuations with thematic investment.

By combining a thematic investing – a style of investing based on identifying long-term global economic and social themes or trends – with valuation and fundamentals analyses, R&M believes it is able to identify opportunities that can be often overlooked by a traditional ‘value’ or ‘growth’ investment approach.

R&M Chief Executive Officer, James Barham said: “Our investment process takes advantage of long-term themes through attractively valued investments in companies with robust fundamentals.

“The search for these leads us across the market capitalisation spectrum and is applied laterally across sectors and countries of differing economic development.  The approach is opportunity driven and benchmark unaware, with portfolios built from conviction level.  Only by the rigorous and systematic application of our process do we identify stocks from which we can deliver superior returns over the longer term,” Barham explained.

New alliance with Fidante Partners

Earlier this month, R&M entered into a long-term strategic alliance with Fidante Partners where they will partner to grow R&M’s business in Australia and New Zealand. R&M will manage the River & Mercantile Wholesale Global Equity Fund, which mirrors the investment approach and asset allocation of their UK-based fund of the same name.

Commenting on the new alliance, Fidante Partners General Manager, Cathy Hales said “We are excited to welcome R&M into Fidante Partners, and we see strong and sustained appetite among institutional and wholesale investors for global equities.”

As at 30 June, 2013, the UK-based R&M Global Equity Fund has outperformed the FTSE All-World Index by 1.5 per cent per annum, delivering returns of 10.3 per cent per annum since inception in October 2009. R&M currently manage $3bn across a range of strategies, with approximately $1.5bn invested in global equities strategies.

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Despite their growing popularity, particularly in the institutional space, many investors are still unsure what alternatives really are, let alone how they can best be used to diversify risk in a portfolio.

These are the views of Andrew Landman, Head of Client Business for BlackRock.

“Alternatives may be less well understood than traditional asset classes, but the fact is that they can offer great diversification benefits to portfolios struggling in the new, more volatile return environment.”

Mr Landman went on to say that many investors are of the view that traditional portfolio models, such as the 60/40 growth/defensive assets just aren’t working in the current environment, in which returns are down and volatility is up in a way not seen in the past. The question they are asking is how to address this situation.

“There is a growing realisation among more experienced investors that alternatives can offer a way of diversifying by risk source that is potentially very attractive,” he said. “In fact, institutional exposure is rising sharply, and alternatives now account for 16% of the global institutional market.

“Despite this, there remain a number of myths surrounding alternatives, and these may be holding some investors back from seriously considering them,” he said. “At BlackRock, we thought it was timely to de-bunk some of these.”

Mr Landman concluded by saying that when used properly, alternatives can play a vital role in the portfolio.

“A well-constructed portfolio of alternative investments can offer a number of benefits, including downside and inflation protection, diversification along time horizons and a low correlation to traditional market indices,” he explained.

“The key is to be sure to do your homework first. Making portfolio construction decisions in line with your personal risk and return objectives is a sensible way to invest, whether that be in alternatives or any other asset class.”

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ETF investors thinking global, not local

A groundswell of local interest in offshore investing has seen nearly 70% of new funds invested in ASX-listed ETFs so far this year go into International Equities exposures.

Mark Oliver, Head of BlackRock Retail Business in Australia, said: “In a market known for its domestic bias, this is further demonstration that Australian investors are increasingly willing to leave their traditional local markets and signals a new era of global investment in this country.

“International ETF inflows for the first three months of this year are booming.

“So far this year we have seen new money flows into international equity ETFs on the ASX reach $266 million, significantly more than the full calendar year for 2012 which was $219 million, and already approaching the total 2011 new money flows of $312 million.”

BlackRock’s ETF business, iShares, is the world’s largest ETF provider.

Mr Oliver went on to point out that in 2013 international ETFs have so far captured 70% of new money into all Australian-listed ETFs.

“While the 12-month figures show some 51.3% of funds flowing to International Equities via ETFs, the year-to-date figure of 70% indicates that the trend is only accelerating, quite possibly since the resolutions in relation to the Euro crisis in September last year.”

Mr Oliver identified a number of drivers for this offshore interest, including the growing limitations of the local equity market in the face of ever increasing investment flows, a strong Australian Dollar, and the increased accessibility for retail investors to global markets that’s now available.

“There is growing understanding that the Australian equities universe can only take an investor so far in terms of the types of companies listed here. And, while in the past gaining the right kind of global exposure was a privilege afforded primarily to the big institutional players, the advent of ASX-listed global ETFs has changed all that,” he said.

“Investors can now enjoy the dual benefits of global opportunity and the advantages offered by the ETF vehicle: transparency, liquidity and cost effective exposure to a wide range of otherwise hard-to-access markets.”

Mr Oliver pointed out the ability to blend a selection of ETFs that comprise a fair representation of value pockets across the globe also offers appeal. It’s a methodology that enables advisers not only to deliver global expertise and value to clients, it is also highly workable – and eminently scalable – in terms of growing a practice.

“Blending ETFs in this manner means advisers can offer their clients diversified exposure at a granular level that’s reflective of the subtleties of the global market,” he explained.

“So, for example, an adviser might consider combining our iShares Global 100 ETF (IOO) which seeks to tap into the strong balance sheets and profitability of the world’s leading global mega-cap companies, with the iShares MSCI Emerging Markets ETF (IEM) which seeks to capitalise on these countries’ role as the engine for global growth.”

He also said that the strong inflows to international ETFs – with the iShares Core S&P 500 ETF (IVV) proving the single most popular product – had undoubtedly contributed to iShares’ ASX-listed ETF business reaching the $2 billion AUM milestone this month.

“Of our 26 ASX-listed ETFs, 19 offer international exposures. The numbers indicate that investors and their advisers are responding more than positively to the global choices they offer,” he said.

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The call came during the Certitude Global Investments national adviser roadshow where Threadneedle and its global equities offering was introduced to its adviser network,following the signing last month of an exclusive retail distribution agreement with Certitude.

Head of Global Equities at Threadneedle, Jeremy Podger, presented a strong case for adopting a true world view when it comes to equity investing. He cited issues such as the capacity constraints of the Australian equity markets and the increased internationalisation of companies in every region as two reasons to adopt such an approach. A third is the need to buffer against likely ongoing volatility – and that large, genuinely global organisations may be better able to weather than smaller, more localised organisations.

“For perhaps the past ten years there has been the view that you could in effect ‘switch’ from one market – say a developed market; to another – perhaps, emerging markets – and pick up gains that way,” Mr Podger said. “However with valuations having converged and emerging economies facing increased cost pressures, trying to capture growth only through emerging market equities won’t give you access to all the best opportunities available in markets globally.”

In essence, said Mr Podger, we are now facing a ‘three –speed’ global economy in which we have near-zero growth in the peripheral European states; sluggish growth in other parts of the developed world and strong but slowing growth in the emerging markets.

For investors, he said, the best way to capitalise on this growth is to look to genuinely internationalised companies – what he described as ‘citizens of the world’ – which have footholds in various markets and can capitalise on growth while minimising their cost base on a global basis. Companies such as BMW, Tiffany & Co, Burberry and Samsung which have positioned themselves to reap rewards from the growing consumer market in Asia while their traditional developed markets have been in the doldrums.

Craig Mowll, CEO and MD of Certitude, opened the roadshow stating: “As the government guarantee expires in October 2011, advisors will be challenged in how they will approach and manage their clients moving forward.

“Due to what we have been experiencing, investing globally will likely be one of the largest of those challenges. But with the likelihood of FoFA taking effect in 2012 and with investors being given a choice to ‘opt-in’, providing clients navigation and advice on 96 per cent of the world’s markets may just prove to be the best value planners can offer clients in a fee for service environment.”

Mr Mowll cited issues such as falling cash rates along with the strong Australian dollar and the need for greater diversification as popular reasons for investors – and especially high net worth investors – to be looking off shore.

Mr Mowll said that it was in light of such upcoming issues that Certitude began looking for a world class international equities equity manager. Starting with a universe of 4,000, Certitude worked with a global research house to produce a high quality shortlist – which led to signing the five-year exclusive distribution agreement with Threadneedle.

“This complements our existing offering with our other investment partners, Lighthouse Partners and Marshall Wace Gavekal,” he said.

“Bringing Threadneedle on board with their global equities offering rounds off the picture and enables advisers who are so minded to present a far fuller and more balanced array of investment options to their clients. It’s an offering we are fully expecting to be taken up strongly given the current market and as more advisers become familiar with the rigour of Threadneedle’s processes.

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• The past week has seen some good news on the Greek debt front with the Greek Government surviving a parliamentary confidence vote, the EU and IMF endorsing Greek austerity plans and EU leaders pledging to head off a Greek default. However, there are still several hurdles to clear before Greece gets a new bailout package. First, the Greek Parliament needs to approve the latest austerity package in order to receive new loans in a vote scheduled for June 28th and then an emergency Eurogroup meeting is scheduled for July 3 to finalise a second bailout package. Reflecting the threat from Greece to the European financial system, ECB President Trichet described financial risk signals in Europe as “flashing red”. Against this background and with signs European growth is slowing, the ECB would be completely crazy to follow through with its threat to raise interest rates again next month.
• In the US there were no surprises from the Federal Reserve’s post meeting statement or press conference by Chairman Bernanke. While the Fed revised down its growth forecasts it committed to maintaining currently easy monetary conditions rather than endorsing hopes for a third round of quantitative easing (ie QE3). Right now its clear that the hurdle for QE3 is high as the Fed regards the growth slowdown as largely driven by temporary factors and the US no longer faces the risk of deflation as it did when QE2 was announced. While Bernanke indicated a preparedness to take action if conditions warranted it is clear economic indicators will have to get a lot worse before this occurs. This only added to market nervousness.
• In Australia, the minutes from the Reserve Bank’s last rate setting meeting offered nothing new from what Governor Stevens told us just over a week ago – that the RBA thinks that if it is right on the economic outlook then interest rates will need to rise “at some point”, but that right now there is no urgency to move. It makes sense for the RBA to sit back and wait for clear evidence of a reduction in global uncertainty and more evidence that Australian economic growth is strengthening or inflationary pressures picking up. This suggests August at the earliest for the next interest rate hike, but we believe there is a growing risk that it may come later and maybe not even this year at all. Outside of the mining sector the Australian economy is very soft. Anecdotal evidence of this abounds: one of my best friends who has a couple of golf shops in Sydney’s west has been complaining for some time about how tough things are. Even my skin specialist told me when I was having my regular skin cancer check that there has been a cutback in discretionary spending on cosmetic skin treatments, like Botox. Things must be tough if Australian’s can’t afford to keep up Botox treatments!
• However, it’s not all doom and gloom. US transport giant FedEx beat earnings estimates and said it saw the soft patch in growth as temporary and a further sharp fall in oil prices is positive for global growth. So if Greece gets another bailout and global economic data improves in the second half as parts supply from Japan returns to normal and as the negative impact of the oil price surge falls out then shares could have a decent rebound.

Major global economic releases and implications

• US economic data remained pretty soft consistent with sub-par growth. Existing and new home sales fell in May, although bad weather probably played a role, weekly jobless claims rose, weekly mortgage applications fell and weekly retail sales data were soft. There was good news on house prices which rose.
• European manufacturing and services sector conditions indicators (or PMIs) fell further in June adding to signs of a soft patch in the global economy.
• The Japanese economy continues to recover from the March earthquake with gains in exports in May and a strong rise in an industrial activity index in April.
• Chinese economic data was consistent with a continued moderation in growth with a further softening in a preliminary manufacturing conditions index for June and an ongoing softening in house price growth in May to an estimated 4.3% year on year, down from a peak late last year of nearly 12% year on year. While inflation looks like it will head up to over 6% in June taking it to the highest this cycle and another rate hike is likely, the softening in growth and its likely flow on to lower inflation through the second half suggests that the tightening cycle in China is nearly done.

Australian economic releases and implications

• It was a quiet week on the data front in Australia, with the big news being a slowdown in population growth last year to 1.5%, it’s slowest in five years. On the face of it, this is a dampener for housing demand and negative for labour supply, but note that its still above the 30 year average population growth rate of 1.4%and in any case since last year the Government has acted to push immigration levels back up to help alleviate skill shortages. Meanwhile, the Westpac leading index rose again in April suggesting growth should pick up.

Major market moves

• Share markets had another volatile week with better news on Greece but poor economic data. This left global markets pretty mixed: up slightly in the US, Asia and Australia but down slightly in Europe.
• Commodity prices were weighed down by ongoing evidence of slowing global growth. In particular oil prices fell further on news that International Energy Agency member countries, mainly the US, would release 2 million barrels per day from oil stockpiles for 30 days. One can question why this wasn’t done earlier this year. It’s mildly bearish for the oil price in the short term, but unlikely to have any medium term impact though.
• Falling commodity prices, a stronger $US generally and reduced expectations for an RBA interest rate hike saw the $A fall slightly.

What to watch in the week ahead?

• The key focus globally in the week ahead will be the Greek Parliament’s scheduled vote on its latest austerity package, the support for which is required for Greece to get the next tranche of loans. While the Greek Government won a confidence vote, public opposition is intensifying and it only needs to lose the votes of five out of 155 governing PASOK party members to lose the vote on the austerity package.
• In the US, the key focus will likely be on the ISM manufacturing conditions index for June due Friday which various regional surveys suggests is likely to fall below the supposed boom/bust level of 50.While this is likely to have been temporarily depressed by Japanese supply chain disruptions and should reverse in the months ahead, another fall in the ISM may add to investor nervousness. Meanwhile, consumer confidence data due Tuesday is likely to rise helped by lower gasoline prices and a strong 15% or so bounce is expected in pending home sales data for May, due on Wednesday. Data for personal spending and income, house prices, construction spending and vehicle sales are also due for release.
• Japanese industrial production data for May due Tuesday is likely to show a solid gain confirming that recovery from the earthquake is underway.
• Chinese manufacturing conditions indexes (PMIs) due Friday are likely to show a further mild softening in the Chinese economy, based on an advanced PMI already released.
• In Australia, expect soft readings for May job vacancies, private credit and dwelling prices which are all due for release on Thursday and similarly soft readings for a manufacturing conditions index and new home sales due on Friday. A speech by RBA Assistant Governor Debelle on Tuesday will also be watched for any clues on monetary policy.

Outlook for markets

• While the news on Greece has become a little better it is still not yet out of the woods and more broadly the worry list remains long with ongoing issues regarding Europe, weak growth readings in the US, the end of QE2 in the week ahead, ongoing uncertainty around the US Government’s debt ceiling and worries about a hard landing in China all likely to contribute to ongoing volatility in shares and possibly more weakness in the September quarter.
• However, beyond the uncertain short term outlook we remain of view that the medium term fundamentals for shares are reasonable. Shares are very cheap again, some of the temporary factors weighing on global growth are abating (such as Japanese supply chain disruptions, the surge in oil prices and bad weather in the US) and monetary conditions globally remain very easy. This all points to an eventual rebound in shares into year end.
• Australian shares are likely to continue under performing their global counterparts, on the back of the strong Australian dollar and the prospect of higher interest rates.
• While the Australian dollar remains vulnerable to a further short term correction, it should remain strong on the back of high commodity prices and a high interest rate differential to the US.
• Softer economic data has helped sovereign bonds in key countries perform well over the last few months as yields have fallen. However, if as we expect global growth re-accelerates during the second half then government bonds are likely to perform poorly over the medium term.

The post Weekly market & economic update appeared first on AdviserVoice.

This comes after Phil Garling, AMP Capital’s current Global Head of Infrastructure, decided to retire from full time executive roles following a career spanning 34 years in financial services and construction.

AMP Capital Managing Director Stephen Dunne said: “I am very pleased to welcome Scott as the new Global Head of Infrastructure.  Scott’s 15 years of direct infrastructure experience will provide a strong basis from which we will continue to expand our global investment opportunities for clients.

“AMP Capital will continue to focus on the attractive opportunities in infrastructure as governments around the world seek to reverse years of under-investment in critical infrastructure and utilities – and converting these into investment opportunities for our clients,” said Mr Dunne.

Mr Davies has over 20 years’ financial services experience and a well-established presence in the global infrastructure space.  He brings a strong record of establishing and growing infrastructure businesses.  He was CEO of the ASX listed Macquarie Communications Infrastructure Group from its inception in 2002, where he was accountable for all aspects of business performance and management.
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Prior to this, Mr Davies held senior investment roles for Macquarie Capital in New York and London between 1995 and 2002, where he was responsible for Macquarie Group’s cross-border asset financing activities with a particular focus on the telecommunications sector.  Mr Davies has also held roles at Hambros Bank in London and Sydney and Minter Ellison in Sydney.  Mr Davies will report to AMP Capital Managing Director Stephen Dunne.
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“Over the nine years Phil has been with AMP Capital he has built our direct infrastructure capability into a world class offer.  Under Phil’s leadership, we expanded the breadth and depth of our infrastructure capability, opening new offices in London, Beijing, New Delhi and New York and he increased the team from seven investment professionals to more than 60 globally,” Mr Dunne said.
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“Phil has formed experienced teams covering the infrastructure life-cycle, from deal origination to asset management and divestment, allowing us to offer leading investment capabilities to clients who want access to infrastructure assets in the United Kingdom and Europe, Australia, Asia and North America.  I personally have enjoyed working with Phil and wish him all the very best for his retirement,” he continued.
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Mr Garling will retain his involvement with AMP Capital via existing board representations, including continuing as its appointee to listed company DUET Group, the Chairman of the Asian Giants Infrastructure Fund (AGIF) and a board member of The Infrastructure Fund of India (TIFOI). Phil Garling will transition his responsibilities to Scott Davies over the coming weeks and will leave AMP Capital in July.

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International equity fund manager, Insync Funds Management, believes that now is the time to buy global stocks.

“Over the last ten years large cap global shares have gone from being wildly overpriced to reasonable value. This is seen by the S&P 500 moving from a PE (Price to Earnings ratio) of 35 times to a current PE of 14 times.

“As a result, the S&P has delivered a meager return of 1.3% p.a. Combined with this has been the re-rating of the Australian dollar which has doubled from around $US0.50 to its current parity level with the USD,” said Bob Desmond, Senior Portfolio Manager, Insync Funds Management.

This has brought a dramatic increase in the buying power of Australian investors who invest abroad. Consider the following example of an investor who bought Microsoft ten years ago:

“This shows for each dollar invested in the company, an Australian investor is getting 10 times more ‘bang for his buck.’ Investors as a group are always backward looking and always want to buy ‘what has gone up’,” said Mr Desmond.

In 2000, investors were selling resources and emerging markets to buy technology and US large cap stocks. Ten years later, they are doing the exact opposite.

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The Korea-Australia Financial Investment Forum has been established to enhance cooperation in financial services and promote the mutual development of the Australian and Korean capital markets and investment funds industries.

The Forum will work on promoting regulatory cooperation; seek to facilitate cross-border investment; collect and disseminate information on the Korean and Australian capital markets and investment funds; as well as support exchanges, organise meetings, seminars, investor awareness and reciprocal visits.

The Korean and Australian economies have both exhibited strong economic performance, leading the world’s developed economies in recovery from the recent global financial crisis. Both countries have sustained an outward focus, welcoming of trade and investment, and have pursued ongoing reforms to foster economic growth and financial sector development.

AFMA, FSC and KOFIA see the establishment of the Forum as a means to further their joint work to develop linkages between Asia-Pacific securities markets and raise the presence of the Asia-Pacific region in international forums related to the securities and funds management industries.

The associations seek to increase investment in the markets they represent, and to foster cross-border investment and financial transactions in each other’s markets. To this end, the associations will be in close consultation with each other on areas for further improvement in the relevant laws, regulations and policies of each market, and will work to enhance cooperation with the authorities governing each market.

In March 2009, AFMA and the FSC each signed bilateral Memorandum of Understandings with KOFIA on closer co-operation.

AFMA and KOFIA are both members of the Asia Securities Forum (ASF) which brings together securities market associations to promote capital flows in the Asia Pacific region.

The FSC and KOFIA are members of the International Investment Funds Association (IIFA) which seeks to promote the protection of investment fund investors and facilitate the growth of the investment funds industry internationally.

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