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Nomura confident of chalking up strong growth in Malaysia

by December 24, 2016 General

Kunio Watanabe (pic) is head of asset management, Nomura Holdings Inc. He is also director, president and CEO of Nomura Asset Management Co Ltd (NAM), a position held since April 2014.

Watanabe joined NAM in April 2009 from Nomura Securities Co Ltd, a sister company. Prior to NAM, his positions included head of equity division, Nomura Bank (Switzerland) Ltd from July 1997 to June 1999, managing director, financial institutions department, Nomura Securities from July 2004 to April 2006, and co-president & head of wealth management division, Nomura International (Hong Kong) Ltd from April 2007 to March 2009.

He was recently in Malaysia and shared Nomura’s expansion plans moving forward. Below are excerpts of the interview:

What are Nomura’s plans for its asset management business in Malaysia, and how important will it be moving forward?

The Malaysian office started with three staff members in December 2006. Since then, we have grown our asset under management (AUM) to RM16bil in 10 years while focusing purely on institutional funds. From being reliant operationally on our Singapore office, the Malaysian business now includes a syariah arm, a developed market global equities team, a complete fixed income team covering domestic as well as syariah-compliant fixed income in addition to the original Malaysian equities team.

Our initial plans for Malaysia were conservative but we are glad to have come in at the right time when the Malaysian capital markets were liberalising, and we have benefitted greatly from that. Malaysia has contributed positively to our group’s AUM as well as profitability in the last 10 years. The fund we launched in Malaysia on Dec 13 allows us to extend our offering to high networth individuals in the country, and marks an important step in the growth of our business here. We have no doubt that the Malaysian office will continue in its growth trajectory and scale greater heights.

In which region are you giving more weightage for your investments?

We are not focused on any particular region. We have made investments where we believe we have the most to gain from. For example, we had acquired ING Taiwan in 2014 and a 41% economic interest in American Century Investments earlier this year.

Kunio Watanabe, Head of Asset Management, Nomura Holdings, Inc.

Which are your stronghold countries? And have you ensured that a customer base exists in the country or countries that you have entered?

Our stronghold is definitely Japan. Outside of Japan, we have expanded our client base by delivering our cutting-edge products across countries. Malaysia is one of our best overseas branches and is the only branch where we have Japanese clients locally as opposed to managing Japanese clients’ money from overseas. In addition to the Japanese focus, Malaysia has been an ideal market for us as it has large institutional clients and offers us the opportunity to increase our presence among retail clients.

What new markets are you looking to enter? How compatible are they with your own market?

We will pay attention to growth opportunities in the region regardless of whether they are organic or inorganic. In Malaysia, we expanded our business organically, but we realise that each market is different and we are always open to new opportunities. We do not have a one-size-fits-all strategy as client requirements can be vastly different. What may work in Japan may not necessarily work in other markets like Malaysia.

As a global asset management firm, any decision to open in different markets is taken with great care. Potential business and sustainability of that pipeline is crucial to that decision.

Do you have the available resources and staff to focus on both expansion and your established business?

We operate our asset management business across 15 entities in 10 countries and have a global headcount of 1,500. By utilising our resources, we pursue organic growth while also paying attention to inorganic growth opportunities that could enhance our overall business portfolio.

Will you be looking to form joint ventures or find partners in your new markets?

We have always been open to it and earlier this year we acquired 41% in American Century Investments. If we decide to enter a new market, we consider and plan the best way through group-wide discussion with our stakeholders.

What differentiates Nomura from the other asset management houses?

Our group founder Tokushichi Nomura set out 10 principles. The asset management business is deeply committed to these:

1) Enriching the nation

2) Putting clients first

3) Global ambition

4) Emphasis on research and robust analysis

5) Staying one step ahead

6) Entrepreneurial spirit

7) Human resources key to overseas expansion

8) Emphasis on team work

9) Business development frame of mind

10) Customer service mindset

This underlying philosophy forms the basis of our approach to investments. If you come to Japan, you will see how our clients have grown alongside us. In Malaysia, we have seen the same thing over the last 10 years and we hope the spirit of our Founder lives on in our teams globally. We believe in Malaysia and have invested heavily in operations here. As far as we know, we are the only fund management house that has a global equities team based in Kuala Lumpur.

Can we see some of your returns over the last 5-10 years?

Broadly, we have outperformed the Malaysian markets by about 400 basis points on the equities side and over 100 bps on the fixed income side.