Asian Asset Owners Navigate Uncertainty with a Focus on Risk Management, Liquidity and Data

Amid global macroeconomic challenges, geopolitical tensions and evolving investment landscapes, asset owners across Asia—including those in Singapore, Hong Kong and Malaysia—are taking a closer look at their investment strategies. With recent market volatility creating a measure of uncertainty, staying the course while being willing to adapt is more important than ever.

To better understand the challenges facing institutional investors today and how they are aligning their strategies for the future, Northern Trust recently sponsored a global peer study of 180 asset owners. Respondents in Hong Kong, Singapore, and Malaysia, consisting of pension funds, insurers, endowments, foundations, hospital/healthcare institutions, outsourced chief investment officers and global family offices, are united in their approach to liquidity and data challenges. Yet regional differences in investment strategy, risk tolerance, and the adoption of technology—especially AI—reflect each market’s unique regulatory and structural dynamics.

Risk Mindset within Asset Allocations

Asia’s investment landscape is evolving. Amid ongoing interest rate shifts and geopolitical uncertainty, asset owners are reviewing their strategies to stay aligned with market reality. At the same time, the region is focused on long-term growth and innovation. As part of this evolution, private market investments are playing a larger role, with asset owners increasingly looking to diversify their exposures and build resilience in their portfolios.

According to the peer study, Hong Kong’s asset owners are signaling a stronger preference for lower-risk investments. 30% of their portfolios are allocated to fixed income, compared to the global average of 27%. Their exposure to private markets is also comparatively low at 11%, in contrast to 17% for Singapore and 15% for Malaysia.

The data suggests Hong Kong asset owners are particularly mindful of market risks and are responding by leaning into more stable, liquid, and short-duration instruments. This may be linked to macroeconomic uncertainty, the ability to quickly capitalise on emerging opportunities, or deliberate strategic positioning.

By contrast, the higher private markets allocations in Singapore and Malaysia point to a greater willingness to pursue long-term return potential, even at the cost of reduced liquidity. These markets may be more comfortable navigating illiquid exposures or have more flexibility, allowing them to seek alpha in less traditional areas of the market. In Singapore, private market interest is concentrated in commercial real estate, a reflection of a robust market in Singapore. Meanwhile, Malaysian asset owners indicated a preference for investing in private credit, tapping into the expanding opportunities for alternative lending strategies across Asia.

The Rising Emphasis on Liquidity

In Asia, liquidity has become a top priority, which, according to the study, is attributed to the interest rate environment and potential for higher returns. In Singapore and Malaysia, the region’s long-standing cash-rich position has deepened, with 87% of respondents saying liquidity has grown in importance. This compares to 60% in Hong Kong—still significant, but lower by comparison.

While the level of importance may vary slightly, the strategies employed to manage liquidity are similar. Asset owners across the region are deploying a mix of strategies, including investing in lower-risk short-term vehicles, increasing cash allocations, renegotiating borrow rates with credit counterparties and counterparty risk monitoring and management.

With many asset owners holding elevated levels of cash—18% in both Hong Kong and Singapore, and 14% in Malaysia—the focus has shifted from building liquidity to maximising cash value. Asset owners are increasingly turning to service providers to explore tools that offer both flexibility and the potential for enhanced returns, including new cash strategies, FICC Repo and short-duration funds. These approaches can help institutions remain agile while putting idle cash to more productive use.

Data Strategies and the Role of Technology

Across the region, data integration and quality are persistent hurdles. In Hong Kong, 50% of respondents cited integrating data across systems and consistency of data as top challenges. To address them, Hong Kong asset owners are calling on service providers for technology product implementation / target operating model design (70%), data support and reporting solutions (50%), better integration of applications (50%) and more real-time data access (50%).

In Singapore and Malaysia, 47% of respondents cited timeliness of data as their top challenge followed by 40% who noted both accuracy and consistency of data as key challenges. These asset owners are turning to service providers for access to more real-time information, centralised data governance and better data support and reporting solutions.

These challenges, and the support asset owners are seeking from providers, reflect a broader market shift. As investment teams face increasing complexity, from multi-asset strategies to evolving risk and liquidity demands, the ability to unify and analyse data quickly is becoming crucial. According to the peer study, Asian asset owners appear focused on reinforcing their operational infrastructure and improving their data management to keep pace with these demands and help enable better investment decision-making.

Additionally, regulatory expectations around transparency and reporting are rising, putting pressure on institutions to modernise their data infrastructure. Whether through internal investment or external service providers, the shift is clear: data is no longer solely an operational concern, but a strategic asset in navigating today’s markets.

Asian asset owners are also turning their attention to the role of AI in improving efficiency and staying competitive. Singapore is a regional leader, propelled by its National AI Strategy 2.0, which outlines their commitment to being a reliable international partner on AI.[1] With a strong innovation agenda and government support, Singapore has positioned itself as a regional hub for AI development. However, despite these national-level strides, many organisations still face challenges with effective execution, often due to a lack of in-house expertise or the ability to operationalise AI effectively.[2]

Hong Kong, meanwhile, is showing growing interest in advancing its AI capabilities. While adoption remains at an earlier stage, there is clear momentum: the government recently announced plans to establish a Hong Kong AI Research and Development Institute to accelerate progress.[3] The mature capital market infrastructure in Hong Kong, and its proximity to China, provides it the opportunity to be a regional hub for mainland Chinese AI start-ups looking to expand into overseas markets.[4] Still, data collection and standardisation remain persistent challenges across the market—issues that will need to be addressed in order to build a more mature and scalable AI ecosystem.[5]

Navigating Change, Embracing Opportunity

As Asia’s investment needs evolve, asset owners across the region are navigating a complex mix of macroeconomic shifts, regulatory changes, and technological transformation. While Hong Kong, Singapore, and Malaysia differ in their investment profiles and areas of focus, they are united by a common goal: building resilient, forward-looking portfolios that can adapt to changing conditions.

With liquidity and risk management top of mind, a renewed focus on private markets, and rising interest in digital tools and AI, asset owners are taking meaningful steps to strengthen their long-term strategies. Success will depend not only on rethinking asset allocation and operational frameworks but also on how effectively they harness innovation and data.

[1] nais2023.pdf

[2] Singapore built an AI-ready economy, now businesses must deliver

[3] news.gov.hk - $1b set aside for AI R&D institute

[4] Hong Kong draws Chinese AI companies from CloudWalk to iFlyTek as city pivots to tech | South China Morning Post

[5] HONG KONG AI INDUSTRY DEVELOPMENT STUDY