Ravi Menon: Asia – short-term bumps along long-term growth path Remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the opening of Korea’s National Pension Service Office, Singapore, 17 September 2015. *  *  *  Dr Choi Kwang, Chairman and Chief Executive Officer, National Pension Service Ladies and gentlemen, good afternoon I am delighted to join you to celebrate the opening of the Singapore office of Korea’s National Pension Service (NPS). This is an exciting development for Singapore’s asset management industry. •  NPS manages one of the largest pension funds in the world, with KRW 500 trillion of assets under management. The decision by NPS to set up an office here is significant. •  This will be NPS’s first overseas office in Asia and its third in the world after New York and London. In setting up an overseas office in Asia, NPS is affirming the long-term growth prospects for the region. NPS is clearly taking a strategic view of Asia against the backdrop of recent market volatility and moderation in growth. Asia’s recent tantrum: what does it mean? Financial markets, including those in Asia, have experienced a surge in volatility over the past several weeks. •  Equity markets have taken a beating. The stock indices in Emerging Asia are down by an average of 18% since their highs in Q2 this year, with the Chinese stock market correcting the most, by about 40%. 1  •  Currency markets saw sharp movements.
The increasing interest in the region is also motivated by the need at many pension funds and sovereign funds to achieve more diversified investment portfolios. •  These funds are increasingly diversifying their portfolio allocations across geographies and reducing the home bias towards investment in domestic markets. •  They are also diversifying across assets to include more non-traditional assets such as real estate, private equity and infrastructure, which promise sustained and attractive risk-adjusted returns. Emerging Asia offers both asset and geographical diversification. •  Emerging Asia will remain one of the fastest growing regions in the world offering prospects of higher long-term returns, while the depth and liquidity of its asset markets should continue to improve. •  The growth dynamics of Emerging Asian economies is not only different from that of developed Europe and America but also differentiated from one another. •  Emerging Asia offers great potential for the development of alternative investment assets such as infrastructure, for which the region has enormous need. I congratulate NPS on the opening of its Singapore office and wish you continued success in your regional strategy. BIS central bankers’ speeches  3