Price Volatility & AI: Key Themes at Asian Investment Week

Asian investors are known for their search for yield, but recent market instability has changed both the focus and means of seeking out solid, stable returns.

FinEX Asia CEO, Maggie Ng, will share her thoughts on both issues at the upcoming Asian Investment Week, organized by Asian Investor. Now in its 13^th year, the Asian Investment Summit brings together experts from asset managers, hedge funds, sovereign wealth funds and pension administrators, while the Family Office Forum North Asia is an exclusive gathering for family offices in Greater China, Korea, Japan and Taiwan.

Volatility shield

Stable, high-yield investments are a growing focus for professional investors as assets globally respond to a stronger dollar, rising interest rates, threats of a trade war and geopolitical instability. The CBOE Volatility Index (VIX) jumped 238% from January 1^st to February 5^th and then dropped again to a more modest rise of 18.75% year-to-date, as of May 15^th.

In this challenging market, consumer credit remains one of the most stable assets for yield-seeking investors. Even through the peak of the financial crisis, returns on consumer credit assets still exceeded the default rates, allowing them to be one of the few asset classes to perform throughout the turbulent period.

AI in PE?

Meanwhile, AI-enhanced investment allocation platforms are enabling a more transparent allocation of capital, particularly in private equity (PE) transactions. PE firms raised more than US$550 billion in 2017, but much of the money went to large funds, making it harder for mid-sized investments, which were once the core of the PE market.

PE has always been a relationship and access-based process, which by its nature, creates information barriers between solid companies that need funding and investors looking for good return on equity. AI has helped to unlock additional alpha for a number of asset classes, but private equity’s strongly interpersonal nature has kept that out of the capital allocation process. While AI has been used in deal evaluation, there are opportunities for further use of advanced data analysis to better match those with and those seeking capital.

Click here to learn more about AI Week.