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.”
INVESTOR RESILIENCE? An analyst said that despite near-term pressures, foreign investors tend to view NT dollar strength as a positive signal for valuation multiples Morgan Stanley has flagged a potential 10 percent revenue decline for Taiwan’s tech hardware sector this year, as a sharp appreciation of the New Taiwan dollar begins to dent the earnings power of major exporters. In what appears to be the first such warning from a major foreign brokerage, the US investment bank said the currency’s strength — fueled by foreign capital inflows and expectations of US interest rate cuts — is compressing profit margins for manufacturers with heavy exposure to US dollar-denominated revenues. The local currency has surged about 10 percent against the greenback over the past quarter and yesterday breached
MARKET FACTORS: Navitas Semiconductor Inc said that Powerchip is to take over from TSMC as its supplier of high-voltage gallium nitride chips Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday in a statement said that it would phase out its compound semiconductor gallium nitride (GaN) business over the next two years, citing market dynamics. The decision would not affect its financial targets announced previously, the world’s biggest contract chipmaker said. “We are working closely with our customers to ensure a smooth transition and remain committed to meeting their needs during this period,” it said. “Our focus continues to be on delivering sustained value to our partners and the market.” TSMC’s latest move came unexpectedly, as the chipmaker had said in its annual report that it has
Gudeng Precision Industrial Co (家登精密), the sole extreme ultraviolet pod supplier to Taiwan Semiconductor Manufacturing Co (台積電), yesterday said it has trimmed its revenue growth target for this year as US tariffs are likely to depress customer demand and weigh on the whole supply chain. Gudeng’s remarks came after the US on Monday notified 14 countries, including Japan and South Korea, of new tariff rates that are set to take effect on Aug. 1. Taiwan is still negotiating for a rate lower than the 32 percent “reciprocal” tariffs announced by the US in April, which it later postponed to today. The
SECURITY WARNING: The company possesses key 3-nanometer technology, and Taiwan should prevent it from being transferred to China, a lawmaker said The Ministry of Economic Affairs yesterday said it would conduct a “strict review” of any proposed acquisition of Taiwanese tech company Source Photonics Co (索爾思光電), following media reports that a Chinese firm was planning to buy the company in the Hsinchu Science Park (新竹科學園區). Local media reported that Suzhou Dongshan Precision Manufacturing Co (東山精密), China’s largest printed circuit board manufacturer, had announced plans to acquire Source Photonics for 5.9 billion yuan (US$823.1 million). The ministry said it has not received an application from Source Photonics and has formally notified the company that any buyout would constitute a change in its ownership structure. The