Asia Asset Management: 2025 Trends and Key Issues

In 2024, Asia-focused asset managers navigated evolving regulations, geopolitical shifts, and complex market dynamics. To read our reflections on the year in our earlier article, please click here. In this piece, we discuss the key trends and issues that we expect Asia-focused asset managers to have on their radar in 2025. 

Trends and Key Issues Ahead 

Trump 2.0 and Intensifying Geopolitical Friction 

The re-election of Donald Trump as U.S. President has introduced a new layer of complexity to the geopolitical landscape. The anticipated intensification of trade tensions and friction between the U.S. and China is a topic of significant concern for all asset managers, but particularly for those with investments and operations in Asia. The uncertainty surrounding President Trump's policies and their potential impact on global trade, investment and geopolitical stability is front and center of discussions. Many industry players have been monitoring key cabinet nominations and the views being shared in confirmation hearings in an effort to get a sense of what may be on the horizon under the Trump Administration. However, there have been competing views on how the Trump presidency will unfold. Some anticipate heightened tensions, while others believe that President Trump’s perceived “transactional” approach to matters could lead to less draconian and more nuanced, negotiated outcomes than what was announced during presidential campaigning. This perspective offers some optimism that China can deliver some mitigation by finding positions that might be attractive to the U.S. as a bargaining tool. 

Enforcement Expectations

Investors are increasingly cautious about the regions they invest in and are scrutinizing a number of U.S. and non-U.S. regulations. This heightened caution, driven by geopolitical tensions, has precipitated an increased expectation of regulatory enforcement. With the U.S. Treasury Department’s Outbound Investment Security Program (“OISP”) having come into effect on January 2, as we discussed in our previous 2024 reflections article, the focus on these rules is expected to intensify in 2025 as asset managers begin to grapple with implementation and compliance. There are ongoing discussions on how funds, both U.S. and non-U.S., can effectively manage investment processes when considering Chinese and Chinese-related investments while at the same time navigating evolving investor expectations and requirements. For a deeper dive into other key issues on the compliance, enforcement and investigations landscape in Asia, our Asia litigation and enforcement colleagues have provided insights in this article. 

China's Economic Recovery

Geopolitics aside, for asset managers with an eye on China, the trajectory of the country’s economic recovery is a critical factor to monitor. This especially includes the policies of the Chinese government to support an economic recovery, the restructuring of certain industries and other internal factors that will have significant implications for investment strategies within the country. But with China’s slowdown gradually easing and the view from some that Chinese portfolio companies and the capital markets have found their floors, this may impact global asset allocations by asset owners in terms of reassessing when the time is ripe to deploy in China in a more meaningful way. 

The “China Story”

Fundraising for China-focused asset managers will continue to be challenging for most. In the meantime, asset managers will focus on portfolio management and generating DPI to best position themselves for the next vintage. One interesting observation from a recent industry conference is that for China-focused GPs, it is not that the “China Story” itself has changed—what is changing is how the China Story is told. Asset managers that focus on more passive, growth-oriented strategies will be a harder sell; what we expect will resonate more among investors are the asset managers with teams focused on value creation and the ability to generate exits creatively, whether through trade sales, IPOs or otherwise.

Interest Rates

Anticipated interest rate cuts and their impact on investment strategies is a critical consideration for Asia-focused asset managers. While the current expectation is moderation, uncertainty introduced by the aforementioned geopolitical developments as well as changes in the U.S. government add further uncertainty to interest rate movements that may require an adjustment in expectations by asset managers.

Credit Funds

Credit continues to be an asset class that industry participants in Asia seek additional exposure to, particularly as a way to secure longer-term returns stability in an uncertain economic environment. For sponsors that have not already built out a credit strategy, we expect to see more discussions of acquiring these capabilities through strategic acquisitions. 

Renewed Interest in Crypto

The thawing of the "crypto winter" is gaining momentum in Asia, with renewed interest in crypto-related funds and investments. President Trump’s pledge to be a "crypto president," the launch of his own cryptocurrency “$Trump” as he assumes office, along with Hong Kong's resurgence in the crypto space, has driven an uptick in the formation of crypto- and blockchain-focused funds. We anticipate this will accelerate in 2025.

Reflections at the Decade’s Midway Point 

2025 marks the halfway point of this decade and we have two main reflections as we approach this juncture.  

The Institutionalization of Political Risk

Over the past few years, political risk considerations have become increasingly institutionalized by asset managers. Today, applying a geopolitical lens is among the central factors in investment decisions that frame certain investment discussions, and is a deliberate point of consideration when evaluating potential assets. This shift means that even if the potential economic return on an investment is high, the introduction of political risk can significantly diminish its ultimate attractiveness. This has become deeply entrenched over the past several years and is here to stay.

Ongoing COVID recovery

Asia has not yet fully recovered from disruptions caused by the COVID-19 pandemic. The pandemic has had lasting impacts on supply chains, exit strategies, investment allocations, and risk concentration. These effects continue to influence investment decisions and strategies within the Asia’s asset management community. Despite the eagerness to put COVID-19 in the rearview mirror, its lasting damage and intertwined geopolitical implications are still significant factors in the current investment landscape.

About our practice

Ropes & Gray’s Asia asset management team serves as trusted advisors to top asset managers and sovereign wealth funds globally. We advise sponsors, investors and investment advisors on all aspects of their business, and have deep experience in various funds including buyout, growth equity, venture capital, distressed, real estate, co-investment, secondary, and funds of funds. Our team assists both emerging and established sponsors with management company structuring, corporate governance, securities law, and compliance. We specialize in Asia- and China-focused private investment funds, representing fund sponsors, sovereign wealth funds, pension funds, and institutional investors in fund formation, structuring, and related transactions.

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