Wealthy people in Asia are readying cash to take advantage of opportunities in financial markets and private equity once the COVID-19 pandemic subsides, the head of private banking at Southeast Asia’s largest lender said in an interview this week.
Clients have increased cash holdings to about 40 percent of their portfolios in recent months, up from about 30 percent before the pandemic, said Joseph Poon, who leads DBS Group Holdings Ltd’s Private Bank unit.
While the unit does not disclose assets under management, it is part of DBS Group’s S$251 billion (US$184 billion) wider wealth platform, which is among the largest in Asia.
Photo: Reuters
“Clients are holding a lot more cash than usual. It’s a very interesting phenomenon,” Poon said.
“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, e-commerce and logistics businesses with funding gaps, he said. Some plan to use the cash for their own business needs and might use it to expand companies through partners.
Poon’s insights mirror a wider trend.
Data compiled by Bloomberg showed that leading private equity firms are sitting on about US$1.6 trillion of dry powder after the pandemic halted private equity deals and roiled global markets.
Still, holding on to cash might mean that some investors have already missed a massive market rally, with the MSCI AC Asia Pacific Index surging about 43 percent 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, 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.
DBS Private Bank, which accepts clients with at least S$5 million in investable assets, is part of DBS Group’s wider wealth platform, which reported that assets grew 7 percent at the end of June from a year earlier.
DBS Group expects assets under management to grow at a similar rate this year, Poon said.
Elsewhere in the region, DBS Group 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, Poon said.
It is also looking to expand in the Philippines, where it only has a representative office, Poon said, without giving more details.
“We kicked off some discussions last year and are still in the midst of structuring the best way to tap on the growing onshore high-net-worth individuals’ increasing investment appetite,” Poon said. “Still, it’s early days.”
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