Asia’s wealthy are readying cash to take advantage of opportunities in financial markets and private equity once the impact of the coronavirus pandemic subsides, according to the head of private banking at southeast Asia’s largest lender.
Clients have increased cash holdings to about 40 per cent of their portfolios in recent months, up from about 30 per cent before the pandemic, Joseph Poon, who leads DBS Group Holdings Ltd’s private bank, said in an interview this week.
While the unit doesn't disclose assets under management, it's part of DBS's S$251 billion (about €156 billion) wider wealth platform, which is among the largest in Asia.
“Clients are holding a lot more cash than usual. It’s a very interesting phenomenon,” said Mr Poon. “Ultra-high-net-worth clients believe there will be a good opportunity in the marketplace once the pandemic impacts have flown through the economy,” he said, referring to those with at least S$30 million in investable assets. Clients are considering financial assets, ecommerce and logistics businesses with funding gaps. Some plan to use the cash for their own business needs and may use it to expand companies through partners, he said. Mr Poon’s insights mirror a wider trend.
Leading private equity firms are sitting on about $1.6 trillion of dry powder, according to data compiled by Bloomberg, after the coronavirus pandemic halted private equity deals and disturbed global markets. Still, holding onto cash may mean that some investors have already missed a massive market rally, with the MSCI AC Asia Pacific Index surging about 43 per cent since its March low.
New assets inflows – or net new money – at DBS Private Bank and another one of its wealth businesses more than doubled to S$5 billion in the first half of the year, Mr Poon said. The funds came from a range of destinations, including family offices in the US, Europe and elsewhere that see Singapore as "a strong jurisdiction", he said.
Bases in Singapore
The world’s rich are setting up family offices in greater numbers and plumping for Singapore as a base, the Monetary Authority of Singapore’s deputy director Spencer Hsu said in July. The city state has been trying to attract the secretive firms set up by the world’s richest clans in an effort to become Asia’s leading wealth management hub.
DBS’s private bank accepts clients with at least S$5 million in investable assets. The assets of DBS’s wider wealth platform grew 7 per cent at the end of June from a year earlier. DBS expects AUM to grow at a similar rate this year, Mr Poon said. Elsewhere in the region, DBS is on track to double the wealth assets at its Thai brokerage unit to S$8 billion by 2023.
The bank has seen rich Thais looking at private banking products in Singapore as they hunt for global investments, Mr Poon said. It is also looking to expand in the Philippines, where it currently only has a representative office, Mr Poon said, without giving more details. – Bloomberg
