Wealth managers temper bets on Asia

HONG KONG/SINGAPORE — Wealth managers at major global banks are tempering their expectations for Asia, their fastest-growing market, after regulatory repression in China and the COVID-related slowdown helped push clients on the key, bankers and analysts said.

Some wealth managers have reduced the credit they extend to wealthy clients, they said, while many clients have moved their money elsewhere or put it in cash as they assess changes in China, as well as the conflict in Ukraine and other global uncertainties.

The slowdown in wealth management activity was evident last week in the earnings results of Credit Suisse, HSBC, Standard Chartered and UBS, which relied on Asia to boost revenue.

“We just have to put up with this for a few quarters, there’s no hesitation,” said a Singapore-based banker with an Asia-focused private bank.

“We help clients adjust portfolios, reduce margin ratios, especially on tech holdings,” he said.

The banker and his peers declined to be named because they were not authorized by their organizations to speak to the media.

Bankers, however, pointed out that while the mood has changed in Asia at least for the next few quarters, global wealth managers still view Asia as their best growth opportunity.

“What we’re seeing is actually a similar sentiment with clients (in Asia) last quarter. So mixed appetite to invest, a bit of a wait-and-see pattern in terms of active investing,” said UBS CEO, Ralph Hamers on a first quarter earnings conference call.

A key change in the investment calculus for China came from last year’s regulatory crackdown targeting industries such as internet platforms, real estate development and private education that have created many Chinese billionaires. Authorities aim to bridge the widening gap between rich and poor through what President Xi Jinping has called a “common prosperity” policy. – Reuters

Dolores W. Simon