In response to widespread acknowledgment that Asia’s investible wealth will sustain its rapid growth, HSBC is keen to capture all of its segments: from retail savers to billionaire speculators.
At a recent media roundtable in Hong Kong, Stefan Lecher, Asia head of HSBC Investments and Wealth Solutions (IWS), emphasised that HSBC IWS services clients across the “wealth continuum”, from mass market with less than $100,000 who trade digitally to ultra high net worth individuals who have access to professional trading.
Various degrees of discretionary services and face-to-face advice are provided for affluent (with $100,000-$2m of investable assets) and high net worth individuals (with $2m-$50m).
“Financial security for our clients is their number one priority, followed by life planning, a focus on core-multi-asset solutions and diversification, and also advice and delegation,” said Lecher (pictured).
So far, the approach has been successful. The IWS division had $607bn of invested assets in Asia at the end of the second quarter of 2024, which is a 21% year-on-year increase, with $150bn newly invested in the region during the past 3.5 years. The inflows have generated a 26% growth in Asia wealth fee and other income in the year to 30 June 2024.
Hybrid service
In particular, the HSBC Prism Advisory portfolio investment service, available to global private banking clients, “combines expert guidance and data-driven insights,” according to Tan Wei Mei, global and Asia head of advisory, HSBC Investment Wealth Solutions.
Its most significant feature is its use of institutional quality portfolio and risk analytics provided by Aladdin Wealth technology from BlackRock.
HSBC Prism Advisory’s assets under management in Asia tripled in the first six months of this year, and funded client accounts more than doubled
Tan noted that clients are moving away from home bias, shifting from products to portfolio and goal-based investing, more willing pay fees for advice, focus on portfolio analytics and risk management and are using strategic asset allocation to anchor portfolio decisions.
“HSBC Prism combines contract-based arrangements, a hybrid model of expert advice and data-driven insights, optimized portfolio construction and the application of evolving technologies,” she said.
Meanwhile, clients are becoming more sophisticated across the wealth continuum.
According to Adam Lau, Asia head of capital markets, HSBC Investment and Wealth Solutions, clients have been positioning their fixed income allocations for Federal Reserve rate cuts by extending duration and actively rolling over short-dated holdings; in equities they have bought high dividend stocks and locked in fixed loan rates through interest rate swaps to maintain income.
As the US and Chinese economies diverge further, clients de-risked in Hong Kong and mainland away from state-owned enterprises, in particular, and switched into US tech stocks while also rotating into different sectors.
Demand for structured products
Lau also highlighted that demand has picked up for structured products among investors, including retail clients – typically for capital protection notes. For wealthier clients, the structures are more diverse, ranging from rate cut positioning to heightened equity exposure and foreign exchange hedging.
“A linear zero coupon note [which pays accrued interest at redemption] launched resonated especially with new structured product investors,” said Lau.
“Indeed, there has been double-digit year-on-year growth for structured investment with the retail segment in Asia. Among global private banking clients, we’ve seen double-digit growth in the region for both US equity-related and foreign exchange investments,” he said.
To meet this demand and encourage participation, IWS Capital Markets has increased the number of structured note issuers for its retail clients, invested in its US research office and upgraded its margining platforms for foreign exchange derivatives for global private banking clients.
