It's getting cold outside, so investors dive into Asia

Business Times: Wed, May 09

[SINGAPORE] Investors from Europe and other regions far afield who were once dipping their toes into Asia are now taking the plunge. Many are looking beyond generic equity funds to more specific or complex investments such as individual stocks or currencies to gain greater exposure to Asia. More are requesting Asia-focused discretionary portfolio management services. And the activity is keeping private banks busy, with a few setting up new teams to offer advice. DBS Private Bank announced the creation of an international private banking team in March, while ABN Amro Private Banking Asia formed a private wealth management and international desk in February. Geneva-based Bordier & Cie also set up shop in Singapore last year with an eye on building expertise in Asian investments. "We have seen a steady increase in interest for Asian investment portfolios over the past years from clients outside the region," said ABN Amro Singapore country executive and private banking Asia head, Hugues Delcourt. Enthusiasm for Asia has climbed partly on the back of the eurozone debt crisis, with the mayhem spurring investors to diversify their holdings geographically. Then there is the appeal of the Asian growth story, which stands in sharp contrast to reports of a eurozone recession and a slow recovery in the United States. Encouraged by improvements in the transparency and governance of Asian financial markets over the years, more investors have started venturing further, and sometimes deeper, into new terrain. According to Mr Delcourt, European clients who used to allocate a small portion of their investments to emerging markets - which include Asia among other developing regions - have started building portfolios focused just on Asia. They have also gone from buying generic equity funds to demanding investment ideas on specific stocks. In the first quarter of the year, ABN Amro received 20 per cent more enquiries from non-Asian clients looking to invest in Asia. "We expect this to further increase as awareness of the new desk builds," Mr Delcourt said. The bank's new desk will not only link up with the European private wealth management franchise, but also take care of client referrals from the energy, commodities and transportation divisions. ABN Amro Private Bank's assets under management (AUM) in Asia is about US$17 billion as a whole. "We intend to double in five years' time our non-Asian AUM, which is negligible at the moment, and we believe that overall this will not constitute more than 10-15 per cent of our private banking Asia AUM," Mr Delcourt said. At DBS Private Bank, its new team aims to help international high-net-worth individuals (HNWIs) keen to invest in Asia's growth. These clients hail from Europe, the Middle East, North Africa and Latin America, but can also include Asians living abroad and non-Asians living in Asia. "They are looking for an alternative investment platform to diversify so DBS acts as a complement and 'add-on' to their existing banking relationships with their traditional Swiss and European banks," said head of wealth management Tan Su Shan. Some EMEA (Europe, the Middle East and Africa)-based HNWIs have asked for exposure to Asian properties, through direct purchases, funds or a basket of real estate investment trusts, she said. Others have asked to include Asian fixed income, equities and currencies - especially the offshore yuan - in their portfolios. The growing appetite for Asian investments was one of the reasons behind Bordier & Cie's expansion into Singapore. "European clients are coming to Asia to get a better yield; we're trying to provide them with ideas on alternatives," said Evrard Bordier, head of the bank here. Bordier & Cie (Singapore) is getting European clients familiar with products such as dual currency investments, and it is also exploring investment themes available in Asia. Credit Suisse's existing international wealth management team in Singapore has expanded in the last few years as interest in Asian investments grows. The team covers clients from Europe, the Middle East and Latin America. "Client demand is there and has increased - especially from more sophisticated clients in the upper HNWI/ultra-HNWI space," said managing director and head of international wealth management, Lars van den Bosch. "The more sophisticated clients do come with very specific needs and requests, and we see more and more demand for discretionary mandates with the respective Asian focus." Investment has not been a one-way street - increasingly affluent Asians have also been casting their nets further for assets to put their money in. Mr van den Bosch pointed out the huge potential in bringing Asian clients to Europe: "Lots of Asian investors are looking at investment opportunities in Europe, etc. Our international wealth management team also acts as a medium to connect the dots and bridge cultures." Source: Business Time