With growing concerns over rising inflation and market volatility, Asia’s wealthy are turning cautious.
People with more than $1 million of investable funds are repositioning towards private markets to shield their assets from market volatility, according to Swiss bank Lombard Odier’s 2022 study about high-net-worth individuals (HNIs) in the Asia-Pacific region.
They have increasingly shunned stocks and bonds to focus on their own companies or assets deemed safer, such as gold and cash.
At the same time, they have largely stayed clear of cryptocurrencies, which has proved particularly volatile.
“APAC investors are becoming more conservative in their portfolio construction and are diverting to ‘safer’ alternative and private assets, while increasingly diversifying beyond their local markets,” said Vincent Magnenat, Lombard Odier’s head of Asia.
“Allocation to digital assets is extremely low.”
A slump in technology stocks and soaring inflation amid rising interest rates have shaved off $1.4 trillion from the cumulative wealth of the world’s 500 richest people in the first half of 2022, according to the Bloomberg Billionaires Index.
That is a reversal from the past two years, when central bank largesse to combat the effects of the Covid-19 pandemic helped to boost assets and personal fortunes with them.
The surge in inflation and its repercussions on the global economy are the biggest concern for 77 per cent of the people polled, Lombard Odier said.
Half of them are worried about market volatility, which has pushed as much as 56 per cent of them to increase diversification.
The wealthy individuals in the survey are also shunning cryptocurrencies, with 83 per cent of them either having no investment or less than 5 per cent of their portfolio backing such assets.
Low liquidity concerns, particularly among older generations, underscore the enthusiasm for private assets, the bank said.
The region’s investors seem to believe that those allow them to capture structural changes in a regulated and risk-managed way, it said.
The rich in Singapore and Australia are leading the trend, with about 60 per cent planning to increase their allocations to private markets.
Lombard Odier, which oversees about 358 billion Swiss francs ($363bn) in client assets globally, surveyed more than 450 HNIs domiciled in Singapore, Hong Kong, Japan, Thailand, the Philippines, Indonesia, Taiwan and Australia between May and June.
“The concern of lack of visibility, volatility and the willingness to manage it are homogeneous across the markets and across age brackets,” said Jean-Francois Aboulker, the bank’s Asia head of HNIs.
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