Asia’s wealthiest clients often take a counter-cyclical, long-term approach to investing, according to Tommy Leung, head of global private banking (GPB), South Asia, HSBC.
“Valuation-driven and disciplined, they avoid chasing momentum and act decisively when opportunities arise after market pullbacks,” he wrote in a note this week.
Indeed, many of HSBC GBP’s ultra-high-net-worth (UHNW) clients and family offices are viewing the steep falls in markets as an opportunity to buy quality strategic assets at better valuations. Some are borrowing to fund acquisitions.
“They’ve been patient, sitting on dry powder, and now they’re selectively deploying capital,” said Leung (pictured).
Although a “small number of more leveraged clients have trimmed exposure or deleveraged, particularly from US equities”, many others see an opportunity to put cash to work.
“Structured investments have been popular given the heightened volatility, and yield-oriented investors are looking at ways to generate income while staying defensive,” Leung said.
“A common thread is that clients want to act; to rebalance and reposition, rather than sit idle.”
One reason for the more “measured” approach is that many investors had applied lessons from recent years, so their portfolios entering the downturn were more diversified across markets and sectors, with lower leverage and higher cash balances.
“There’s a shift away from concentrated bets in single markets or themes. Instead, they’ve positioned for resilience,” said Leung.
However, HSBC GPB’s clients are also reassessing how much exposure they want in US capital markets and to the US dollar. Therefore, UHNW individuals are increasingly hedging their foreign exchange exposure.
