What Asian investors want right now

24 November 2022

Global volatility and the aftermath of Covid-19 have not dampened Asian families’ appetite for investment with the value of assets under management (AUM) held by Asian investors set to double between 2021 and 2025. We look at the key investment trends driving this growth.

The pandemic has done little to dent the spending power of the world’s most wealthy, and in Asia, there are more super-wealthy clients than ever.

According to Forbes, the Asia-Pacific boasts the most billionaires, with 1,088, followed by the United States, with 735, and Europe, with 592.

Billionaires aside, Asian investors are – as a group – increasing their clout, as Accenture’s Asia Affluent Investor Survey revealed.

The survey spoke to 3,200 private investment clients across eight Asian markets: China’s mainland, Hong Kong SAR, India, Indonesia, Japan, Malaysia, Singapore and Thailand.

The research, which took place between December 2021 and January 2022, found wealth split into two distinct groups; 40% of clients had investable assets of US$100,000 to US$1m, while d 60% fell within the high-net-worth (HNW) or ultra-HNW stratum, with household assets above US$1m.

This surge in affluence is being felt across Asia, its dynamics reaching beyond the manifestation of  ‘growth for growth’s sake’ – i.e. in enriching large corporations. This new wave of wealth, in a post pandemic world, is increasingly being invested in more altruistic and innovative receptacles.

Family first  – succession planning

Asia is a region where protecting family-generated wealth is a priority, not surprisingly as the region’s dynamism has in part been fuelled by the surge in home grown family-led start ups.  It’s estimated that by 2030 around US$15.4 trillion in family wealth will be passed down to the next generation. This wealth – estimated at nearly US$2 trillion will be transferred to Asian heirs, according to research firm Wealth-X.

This transfer is being fuelled by demographics because while the wealth is being generated among young businesses, a large number of Asian founders are hitting retirement age.

The popularity of the family office has also seen succession planning emerge as a priority for Asian investors and many wealth management firms have been evolving their client offering to cater to ultra-rich families and help set up frameworks for succession and wealth transfer planning.

Investing for the greater good – ESG and philanthropy

Accenture’s research also shows that ESG-led investing will likely more than double in Asia in 2022.

Charity and philanthropy are also strong trends and Accenture expects them to become more mainstream by the changing demographics of the affluent population.

Cap Gemini’s Top Trends in Wealth Management 2022 report found that more millennials and Gen Zs were becoming High-Net-Worth-Individuals (HNWIs), bringing with them new ideals and beliefs which are influencing their investing habits; nearly 40% of HNWIs under the age of 40 were likely to request an ESG score for products offered by their firm.

While lack of ESG investment solutions has been cited, experts believe the supply of suitable ESG products will be resolved by increasing regulation.

Digital assets as mainstream

Digital assets have captured the investment community’s imagination and are considered a top-five asset class for investors in Asia. Accenture found there was soaring demand with 52% of affluent investors in Asia allocating an average of 7% of their portfolio to digital assets, more than forex, commodities or collectibles.  As with ESG this is a trend being led by younger investors whose risk appetite means they are comfortable being exposed to digital assets. But while wealth managers remain reluctant to recommend them, investors are expected to continue to plough their wealth into them, with an estimated 73% of investors holding some digital asset by the end of 2022. As with ESG supply and demand could be a continuing issue as wealth management firms appear to remain reluctant to recommend them even though digital assets could represent a US$54bn revenue opportunity.

Singapore – where investors come together

Singapore as one of the main Asian investment hubs is embracing all of the above trends and more.

Not only a thriving centre for single family offices, there were around 400 operating in Singapore at the end of 2020, but its government has been driving forward regulatory change aimed at making the city nation a destination for ESG-investing.

In 2016, the Singapore Exchange began asking listed companies to publish an annual sustainability report on a “comply or explain” basis and in 2020 the Monetary Authority of Singapore (MAS) released a set of guidelines around environmental risk management. This was followed by the Singapore Green Plan 2030 and accompanying initiatives including the Singapore Green Finance Centre October 2020 and the Green and Sustainability-Linked Loan Grant Scheme (GSLS).

In August 2021, the National Environment Agency (NEA) announced the establishment of S$3 billion Multicurrency Medium Term Note (MTN) Programme and NEA’s Green Bond Framework.

The Singapore VCC structure was launched in January 2020 to encourage foreign funds to re-domicile in Singapore as well as grow interest in incorporating new VCCs in the jurisdiction.

In 2022, the Wealth Management Institute established the Global-Asia Family Office Circle (GFO Circle). responds to a real and growing need for community building, collaboration and learning in the family office sector. By bringing together a community of family office principals, professionals and service partners, the GFO Circle will be a trusted environment for networking and knowledge sharing.

The personal touch

In a world where fintech has made robo advice the norm Asian investors are bucking the trend and are – post pandemic – actively seeking a relationship with their advisory proposition.

Refinitiv’s 2022 Wealth Management Report found that nearly half (47%) of the Asian clients it surveyed were prepared to pay more for personalised investing. That compares with 40% for their global peers.

When broken down into age groups, 64% of millennials and 51% in the 35-54 age bracket were  willing to pay more for personalisation.

How ZEDRA can help

Our Active Wealth approach is ideal for wealthy families, because we serve clients holistically, rather than dividing family structures into silos that are categorised based on the entity’s purpose and the underlying assets.

We can also provide a one-stop shop solution, acting as project manager and coordinator, and bringing in the professionals – legal or tax where necessary.

We can also advise on the adoption of environmental, social and governance (ESG) centred practices to help you make a positive impact on society and the environment and align your business goals with the ESG agenda.

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