Investors increasingly spreading their wealth amid global uncertainties

SINGAPORE – Investors are increasingly spreading their assets across various markets to reduce risk from global uncertainties, which presents more opportunities for banks to capture wealth flows, said two senior bankers from HSBC.

The next generation of business leaders are also thinking about what a sustainable future means for their firms, which has led to geographical diversification of not just their companies’ operations but also their personal wealth.

Mr Tommy Leung, HSBC’s head of global private banking for South Asia, encompassing South-east Asia and India, said patriarchs or matriarchs in wealthy families often kept to their core markets. “But now, the next gen is quite happy to look outside their core market.”

HSBC can play a role by helping these clients look for target firms in renewable energy sectors, in places like Australia and China, he said.

Investors are also choosing to have “more pockets of wealth everywhere” rather than simply moving their wealth from one destination to another, he said.

“Historically, Hong Kong and Singapore have been the two most popular booking centres but, now, more and more clients are interested in Switzerland, in the UK, or even farther,” he added.

“We are also seeing more North American, European and Middle East clients looking to place their assets in Hong Kong and Singapore to tap the opportunities in Asia. So we have seen diversification go both ways.”

Separately, a McKinsey article on Sept 6 noted that wealth flowing into Hong Kong and Singapore is mainly coming from elsewhere in Asia, but there will likely be increased wealth flows from Europe and North America as many global investors see Asia as a safe haven for portfolio diversification.

In 2023, Hong Kong and Singapore each managed roughly US$1.3 trillion (S$1.7 trillion) in offshore assets – trailing only behind Switzerland’s US$2.5 trillion, added the management consulting firm.

HSBC’s global private banking business in Asia saw US$15 billion in net new invested assets in the first half of 2024. The unit contributed nearly half of such assets globally in the lender’s wealth and personal banking business.

In Singapore, net new money inflows in the first half exceeded inflows for the whole of 2023, said HSBC, which counts the city-state and Hong Kong as its main booking centres that open accounts and serve clients.