2023: Leaping Like a Rabbit

2022 was another year of uncertainty and instability!

Particularly in Asia, investors’ lack of a holistic portfolio approach makes them prone to making short-term irrational investment decisions. Unfortunately, even if you held a typical 60/40 portfolio last year, there was no place to hide in the broad equity and bond markets.

At Morningstar, empowering investor success in times of uncertainty means steering investors to their long-term financial goals and identifying opportunities to separate the wheat (say, moaty stocks and highly rated active mutual funds) from the chaff (ARKK and some cryptos, for example).

Looking ahead in 2023, it is set to be a bumpy ride with a looming recession, inflation and rising interest rates. Nonetheless, we can see some optimism by considering the full perspective of more attractive valuations and better risk/reward.

While we expect Morningstar’s business in Asia to remain resilient, there are a few trends to stand out in the region this year:

1.?????Normalization

The last two weeks of 2022 came the long-awaited news of China and Hong Kong easing almost all the covid restrictions. Although there would be a period of pain with a rising number of cases, we all look forward to a more normalized 2023 to travel, host and attend more physical events. To start, we are looking to celebrate our annual Morningstar Awards in person during March in most markets in Asia.

I cannot emphasize enough the importance and challenges of keeping all our colleagues engaged and connected, especially the newly joined, after we adopted the flexible working model. Expect more team-building activities and my culinary skills showcase (again) in 2023!

2.?????Growth and Diversification

We continue to grow our teams and capabilities in the major financial hubs in Asia – Hong Kong and Singapore.

For Singapore, I am very proud to have witnessed the growth of our team there over the past 15 years. Our recent move to a much bigger office space at UOB Plaza 1 Tower allows us to enhance our reach beyond Singapore to serve investors in Malaysia, Indonesia and other Southeast Asia markets.

On the other hand, Hong Kong presents plentiful cross-border investment opportunities, thanks to the development of the Greater Bay Area (GBA) and the gradual opening up of China’s onshore financial markets to foreign investors. The potential is two-way: when international investors wish to seek greater clarity and access to China, and Chinese companies try to replicate their domestic success formula overseas, by offering technology-led personalized investment services in scale. With Morningstar’s 20+ years of experience in the GBA, we’re well-positioned to serve investors in both ways.

As our business grows, we have also achieved greater diversification to cover all investor needs. In 2022, we welcomed the Praemium team to our Hong Kong office. We are proud to say that Morningstar now offers data, research and analytics across all major asset classes in public and private markets, empowering individual to institutional investors to achieve financial success.

3.?????Regulation

While the discussion of ESG in Asia is not as heated as in Europe and the U.S., some local regulators have already been pushing for more disclosure and transparency for sustainable investments and ESG rating providers. We expect the trend to continue in 2023, which will pave the way for stronger interests and greater adoption of ESG in the region.

Outside of ESG, we also see more regulatory development which aims to strike a balance between technological innovation and investor protection. Take the recent debut of crypto futures ETFs in Hong Kong as an example.

Morningstar always advocates for transparency, as we believe proper disclosure on fees, risks and conflict of interests is conducive to investor experience. We keep abreast of the trends to provide the most suitable solutions for companies to address regulatory needs.

I wish you all a prosperous year of the Rabbit, which symbolizes longevity, peace and wittiness in Chinese culture. Be clever and vigilant like a rabbit, stay healthy and stay invested!

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