While global markets last week were reporting some of the worst daily sessions in decades, private banking clients in Asia are reportedly exhibiting relative immunity to turbulence and are in some cases capitalizing on volatility.
At Indosuez Wealth Management, virtually no outflows were observed from its discretionary mandates in Asia since the beginning of the coronavirus outbreak despite increased market volatility.
«My first line of indicator is relationship managers and the reaction has been muted,» said Grizelda Lee, the bank’s Asia head of discretionary portfolio management, in a conversation with finews.asia. «Of course, many continue to ask about the outbreak but the information available has been abundant and satisfactory for investors.»
According to Lee, part of the relative calm is attributable to Asian clients’ broader portfolios which have for a while been positioned for greater exposure to new economy stocks – often Chinese tech and e-commerce companies – which provide some protection from the outbreak.
Trading Volatility
Not only have wealthy Asian investors opted against major selling, they have in some cases upped trading activities to capitalize on increased volatility. At DBS, for example, 2020 private banking trading volumes grew as investors sought structured product investments that provided protection or expressed future optimism.
«Clients haven't been overly spooked from the market's swoon so far,» said Joseph Poon, deputy global head of DBS Private Bank, in a «Business Times» report.
«The rise in implied volatility has created the opportunity for us to create interesting structured investments aimed at offering enhanced levels of protection or performance when markets normalize.»
Buy Now?
But increased client activity has not been only limited to short-term or derivative-based risk-taking. Some high net worth investors in Asia are in fact viewing current equity levels as a strong entry point especially in light of the various longlasting equity rallies in recent history.
In addition to doubling notional trading of derivatives in the first two months of 2020, Bank of Singapore reportedly posted in the same period an 86 percent increase in trading volume of cash equities – a decent indicator of long-only sentiments.
«[Current] volatility provides you with great entry levels in core assets that you always wanted to own,» said Julius Baer’s Asia chief investment officer Bhaskar Laxminarayan during a media call last week.
