41 THE FINAL WORD — Impact of the COVID-19 pandemic

Lok Yim, head of Deutsche Bank International Private Bank APAC China appears to be doubling down on the zero-Covid strategy and this will remain the case until after the Winter Olympics in Beijing. This could present a challenge for the economy, which has been on a weaker footing in 2H21. With the ongoing domestic weakness and external uncertainty over US-China tensions, we expect continued volatility in Chinese asset classes. Policy easing could provide some support for growth, but regulatory tightening may endure. In our view, the heightened volatility could present some selective opportunities for longterm investors.

While valuations of Chinese stocks may now look attractive after recent declines, caution is still advised in the medium term – on account of regulatory concerns, slower Chinese growth, tighter credit and the problems in the real estate sector.

Omar Shokur, CEO Asia, Branch Manager Singapore, Indosuez Wealth Management The roadmap for HK-Chinese equities will remain volatile during the first half of 2022. The fiscal and monetary easing highlighted in the Central Economic Work Conference (CEWC) held by the Chinese government in December 2021 will take time to filter through into the economy. Besides, investors’ confidence will not return until there are clearer signs of abating regulatory tightening on the tech and property sectors. The Omicron variant could hurt near-term sentiment, but its severity should be of lesser concern.

We expect market momentum to improve into the second half of the year. Higher credit impulse typically goes hand-in-hand with market momentum. We believe HK-China shares should see a modest rebound in the range of 8-10% by year-end. Any upside revision from there will depend on the magnitude of policy easing.

In terms of strategy, we see value in financials, especially the China banking stocks as they will benefit from higher loan growth guided by PBoC. Renewable names should see a further re-rating in view of the decarbonisation drive. Consumer staples are worth a revisit as they are expected to achieve higher earnings growth in the next two years. Internet names should see further decline in earnings this year as tech giants like Alibaba have said they will ramp up investments while sacrificing profits. We believe there will be better times for the Internet sector in 2023. Eleven Ying, global market head and Singapore CEO, Heritvest Global China's annual GDP growth rate is expected to be 5.0% in 2022. We just happen to have released our "Guidelines for 2022 Global Assets Allocation". Our core investment themes for 2022 are:

• along with the uptake of vaccinations and effective medicines, healthcare, pharmacy and other benefited service-oriented sectors could take off. • pay attention to the application of cutting innovation technology sectors, which should help elevate the productivity of the whole society • against the backdrop of increased uncertainties, investing in alternatives can effectively complement the traditional portfolio • climate change will become the key trend in ESG investments • China's high-quality development will centre around the specialisation, refinement, differentiation and innovation • under the main theme of China's internal circulation, consumption will improve in quality and increase in volume • China's China "dual carbon" goals (reaching carbon emissions peak before 2030 and becoming carbon neutral before 2060) will aid the long-term development of new energy • in the new wave of China's infrastructure investment, there will be excellent opportunities to invest in logistics-related real estate

Cai Xinfa, Ping An Group executive, special assistant to the Bank’s president and head of retail banking, Ping An Bank In terms of policy impact: The core factors that will affect the investment of the whole year are that the tone set for 2022 is stable growth, and that the 20th National Congress of the CPC to be held at the end of 2022 may propose new initiatives and goals for modernisation. Stable growth is expected to strengthen risk assets such as A-shares and Hong Kong stocks.

In terms of investment advice, we have the following recommendations:

For A-shares, the index will rise slightly. Focus on investment opportunities in the three main lines, which are new infrastructure and new consumption in the policy line; consumer staples in the performance line; technological innovation and carbon-neutral investment in the long-term growth line. We expect bonds to be volatile throughout the year. The risk of default will decrease to some extent.

Three major factors, including policy fix-up, performance recovery, and valuation bottoming out, will bring Hong Kong stocks allocation value, but their rise will still require some optimistic signals.

The main factor for Chinese USD bonds will be the impact from the Fed shrinking its balance sheet. Another will be the default in the real estate industry. However, the above-mentioned is expected to improve in 2022, which may bring investment opportunities.

Alok Saigal, head, Private Wealth, Edelweiss Wealth Management China has always been a volatile market with sharp drawdowns and equally fast recoveries. I think, in these volatile times, it can be a good opportunity to start accumulating Chinese equities via strong fund managers and pooled vehicles. Outside the developed markets, China is the only country that can provide a lot of opportunity to the global risk capital and has the ability to absorb capital. Thus, China shall always remain a number one alternative to US equities. However, an allocation to Chinese assets should be done with at least a five-year investment horizon as current volatility could continue longer. Given the majority of Asian wealth is located onshore, how should international private banks best target and differentiate themselves in these markets? For domestic regional private banks, what is the most effective strategy for competing with international players?

Vincent Chui, head Wealth Management, Asia Pacific, Morgan Stanley PWM Asia Onshore and offshore private banking present two very different sets of services and products for the same segment of UHNW and HNW clients of international private banks. There is definitely synergy between these two sets of businesses, particularly in terms of client referral, but client motivations and expectations differ between the two.

Generally speaking, offshore private banking focuses on global asset diversification, wealth planning, capital markets and access to sophisticated products and global connectivity. Onshore private banking provides a much larger range of local products which could involve both simple and sophisticated banking needs. Because of the changing global and regional political, economic and health challenges, there remains a strong secular growth opportunity for offshore private banking, even though the majority of wealth will always be onshore.

Tee Fong Seng, CEO Asia-Pacific, Pictet Wealth Management Even before the pandemic, with the advent of Common Reporting Standards (CRS) and Automatic Exchange of Information (AEOI), the wealth management hubs of Singapore and Hong Kong had been upscaling in terms of client segment focus, targeting more sophisticated clients.

The governments in Hong Kong and Singapore have initiated programmes to facilitate this transition. InvestHK and the Hong Kong Monetary Authority, as well as the Monetary Authority of Singapore and Economic Development Board in Singapore have incentivised and attracted UHNW clients to set up family offices (FOs) in the both cities. The introduction of the Variable Capital Company (VCC) highlights how the Singapore regulator is incentivising FOs to use a fund structure for their longer term wealth succession planning. Hong Kong too has introduced various tax incentive regimes to attract setting up of funds in the city.

While some international players are establishing domestic branches or subsidiaries onshore, we have seen a trend among regional and domestic banks of collaborating with international private banks through strategic alliances, partnerships or joint ventures, to bring international wealth management capabilities onshore.

For instance, in November 2019 Thailand’s regulator relaxed foreign trading and exchange regulations and Thai nationals can now invest offshore. Pictet has taken a long-term positive view of the Thai market and has forged an alliance with Bangkok Bank. As Pictet prides itself on best-in-class investment solutions and platforms, combined with the distribution network of Bangkok Bank, we believe this is a “win-winwin” for Pictet, Bangkok Bank, and Thai clients.

Since our collaboration agreement last year, a few hundred million dollars has been invested into Pictet funds and managed products distributed by Bangkok Bank.

Raymond Ang, global head, Affluent Clients, Standard Chartered Bank As an international private bank, the key differentiating factors which Standard Chartered brings include:

• a presence in 59 of the world’s most dynamic markets, with strong local presence in Asia, especially in key financial hubs such as Singapore and Hong Kong, which allows us to capture onshore wealth; • an offshore network and presence which allow serving clients when they have offshore needs; • the ability to help clients invest and diversify internationally; • depth and breadth of product offerings, such as access to alternatives solutions, FX and structured products, ESG-driven investments and a robust and flexible credit offering (although the gap with local players is narrowing); • the ability to provide wealth and succession planning advice and solutions; and • the ability to offer solutions across multiple booking centres aligned to clients’ international wealth needs.

As onshore wealth grows, there has been a trend where international private banks have started (or are starting) to go onshore through partnerships or acquisitions to capture the growth opportunities.

For Standard Chartered, we are an international bank present in the key Asian markets. Our unique footprint, especially across many emerging market economies, is a key advantage. Our ‘One Bank’ culture enables the private bank to benefit from collaboration and cross-fertilisation amongst different countries and teams, taking advantage of the wide array of talent and expertise that ultimately benefits clients.

Kwang Kam Shing, CEO of J.P. Morgan Private Bank Asia Our clients – where they have businesses and families across jurisdictions – are generally global in nature and are keen to connect with likeminded people in other regions. We’re able to cater to this need because we can draw on the strength of our global investment capability and network to help connect clients with the right people — no matter where they are.

Taking one step back and looking at J.P. Morgan overall, strengths in other lines of business gives clients access to other J.P Morgan capabilities through partnerships, where we operate in 17 markets in Asia Pacific.

Our advisors and team operating in-market are equipped with world-class financial acumen and nuanced understanding of the local landscape, who are able to address unique market needs and ever-changing market dynamics.

Michael Blake, Asia CEO, Union Bancaire Privée UBP’s Asia business is founded on a vibrant and fast-growing international wealth management franchise. This is our clear area of expertise and we strongly believe that the international wealth management market will grow with a focus on Hong Kong and Singapore. With our clear proposition, we are well placed to support clients in both jurisdictions.

Our approach to onshore markets outside of Hong Kong and Singapore is to focus on geographies where we believe we can establish a strong and meaningful business for the long term. China stands out in this context as the biggest opportunity across the region. In fact, I believe we are now approaching a golden age of wealth management development in China, where international investment expertise will become increasingly important and accessible to domestic clients. As always at UBP, we will lead with investment expertise, focusing on specific segments where we can add value.

David Shick, head Private Banking Greater China and branch manager Hong Kong, Bank Julius Baer Although the landscape is changing and can often present different challenges, the client and personalised advice remain at the core of everything we do. We see a vast amount of potential in technology to create a more efficient value chain for the banking industry, and our strategy at Julius Baer has always been to invest in all aspects of growth. Two years ago, we introduced a strategy to shift, sharpen and accelerate, and have advanced further than we previously thought possible. Our priority is to embrace positive transformation and stay relevant to our clients, with prompt signals through their desired channels.

The core of an effective strategy to compete will be in seamless connectivity between clients and relationship managers, ensuring all needs are met in any way they need, be it physically or virtually. Additionally, we remain steadfast in the face of the increased risk posed by cyberfraud, and rigorously maintain the safeguards that provide a secure banking environment for clients.

Investing heavily in technology will enhance the client experience, and while much of the client base is transitioning to a younger generation who may prefer to be engaged on digital platforms, the importance of ensuring our systems remain accessible and easy to understand is essential to us, and we ensure all clients are comfortable using the modern tools at their disposal that allow for a more integrated ecosystem.

Another key to staying competitive in the market is speed of communication, and even though technology has transformed how quickly we can notify and engage with clients, we function on the dedication and talent of our team, which is evolving alongside these accelerated channels of communications. Andy Chai, Asia CEO, Bank J. Safra Sarasin The private banking industry has evolved much over the last decades. Private bankers, in addition to having the skillset to develop and nurture client relationships, are expected to have a good understanding of global markets, macroeconomics and even geopolitics, in order to cater to the clients’ evolving needs, fill the potential gaps in their investment portfolios, meet their financial goals and advise on their business and wealth succession planning.

Long-term thinking is the main condition for real and lasting economic success and private banks have to stay ahead of the market. In the last couple of years, ranging from young nextgeneration clients to sophisticated entrepreneurs, all are becoming more environmentally and socially conscious, and ESG has gained so much attention. J. Safra Sarasin has been adopting a sustainable investment philosophy for over 30 years, where sustainability is an integral component of the corporate strategy, and the lens for the viability of investments.

Sustainability and climate change took something of a backseat for many in the face of the pandemic. However, we have actually accelerated and broadened our commitment to the sustainable investment approach. Sustainability considerations play an essential role in identifying the winning business model of tomorrow. We have a well established approach to thematic investing, across the four broad themes of Green Transition, Changing Consumers, Technology Disruption and Future of Health. The latter two themes have proven to be particularly attractive to clients who are looking to benefit in the short term and to be structural winners in the mid and long term. We have been incorporating a sustainability mind set at all times to increase the quality of our analysis and raise the level of our insight.

Arnaud Tellier, CEO Asia Pacific, BNP Paribas WM It is correct that the majority of Asian wealth is located onshore. However, most of the UHNWIs are entrepreneurs who have created considerable wealth by capitalising on the opportunities of the rapidly growing economies of Asia, in particular, China. This is the segment we target and we believe that we are one of the bestpositioned international financial institutions to serve them in Asia Pacific for a number of reasons. As wealth grows, these individuals — who have succession and wealth planning needs, and who have an institutional investor mindset — prefer a more professional approach to managing their wealth.

This is where global universal banks come in. They have the international connectivity and in-house capabilities to meet the increasingly sophisticated needs of UHNWIs in this region.

For BNP Paribas Wealth Management, we have fostered a trusted relationship with families and entrepreneurs in the region; these are multi-generational relationships which have grown into regional and even global players in some instances.

BNP Paribas has a legacy of over 160 years in this region, with a presence in 13 markets. Not only do we have a strong franchise and brand name, our ability to draw on the strength of the ‘One Bank’ model in the region and our European connectivity set us apart from others. The ‘One Bank’ model can only grow stronger with the amazing trend of wealth creation through business creations and innovation in the region. Meanwhile, we are able to take full advantage of the capabilities of our investment bank as well as our asset management and real estate business to serve global and sophisticated investors.

Terence Chow, head, RBC Wealth Management – Asia RBC Wealth Management is differentiating itself in Asia with a strategy that highlights our specialty around serving Asia-based clients with global lives – particularly those with strong connections to Canada, US and British Isles.

Many wealthy families are choosing to split their time and business interests between countries, with others in retirement or enjoying the lifestyles that they worked so hard to create. While the concept of a global footprint may seem glamorous, it is also complex. Each jurisdiction has its own rules, regulations and customs that may cause frustration or challenges, particularly when clients are considering education, tax residency, real estate, wealth transfer, estate planning and business needs across international borders.

RBC is one of the largest banks in the world by market cap and a leading global wealth and asset manager. With our global footprint and full suite of capabilities, services and products, we are in a unique position to meet the needs of clients who fit this mould.

This is where we will continue to win, rather than trying to compete with the local private banks in Asia alone. Benjamin Cavalli, head of Wealth Management Asia Pacific, Credit Suisse We are obsessed about onshoring and this continues to be a top priority for our wealth management activities in Asia. There are tremendous wealth opportunities in this region and we want to be in the right places to capture growth especially in wealth accumulation, which is rising faster in Asia than in any other region. It is equallyimportant for us to access onshore wealth across Asia due to its varied and at times complex regulatory and business environment in different markets.

We have been rigorously expanding our regional footprint into onshore markets over the years and now have the most diversified onshore and offshore footprint in the industry. This positions us well to capture opportunities in the region.

As testament to our strategy, we have built highly successful onshore businesses over the last 10 years in the largest wealth markets of the region, beyond our Hong Kong and Singapore regional wealth hubs. Since 2017, we have expanded our onshore wealth management services to cover Australia, India, Japan, and Thailand. We also serve clients based in Indonesia, Malaysia, the Philippines and Taiwan through our international hubs.

A key focus for us is to continue to strengthen our position as the “Bank for Entrepreneurs” and deliver solutions that are tailored to what clients want, across both private banking and investment banking. We will keep evaluating opportunities to make the most of our well-established investment banking footprint across the region, where it has a decades-long history in most markets, which is a key differentiator in our onshore strategy. Eleven Ying, global market head and Singapore CEO, Heritvest Global Personally, I believe that international private banks and domestic regional private banks should not deliberately pursue anything different. This is a process of learning from each other and drawing on the experience of one another.

Alok Saigal, head, Private Wealth, Edelweiss Wealth Management I believe the Indian HNWIs consider themselves as a global citizens rather than remaining tied domestically. This means they have assets in jurisdictions where they spend time for either residence, travel, leisure, education, or investment. International banks can focus on the global capital and domestic banks can focus on the onshore capital.

Domestic banks have an edge over international banks as they have a wide range of domestic offerings. Such a situation will allow international banks and domestic banks to co-exist and allow both to operate independently and profitably. Omar Shokur, CEO Asia, Branch Manager Singapore, Indosuez Wealth Management The sheer depth and breadth of the talent pool in offshore wealth centres such as Singapore and Hong Kong, their regulatory environment, technological infrastructure, availability of sophisticated products and structures and legal framework mean that the offshore model remains strong and attractive for wealth managers and clients alike.

Indeed, it is not a question of competition. Clients need both domestic and international banks because their needs are varied and multidimensional. While domestic banks have their strong value propositions offering deep local networks and presence, international banks offer clients access to international markets and booking centres.

As such, we see many HNWIs and UHNWIs choosing both domestic and international players to manage their portfolios.

CATHAY UNITED BANK

It is no understatement to say that 2021 was a watershed year for Taiwan’s private banking industry: the island’s regulators became determined to push the development of wealth management to a new level with the introduction of “Wealth Management 2.0”. As one of the seven banks/security firms to receive the new wealth management licence in 2021, Cathay United Bank’s private bank has long been recognised as an industry leader to serve Taiwan’s HNW/UHNWIs.

Since its establishment eight years ago, Cathay United Bank Private Banking has sustained its growth momentum, marking a CAGR of 30.8% in assets under management. In 2021, AUM was up 27% YoY while profit rose 42.6% YoY, partly helped by regulatory tailwinds in wealth management.

Throughout 2021, the Taiwanese private bank built its proposition around three pillars: an onshore/offshore platform in Taiwan, Hong Kong, and Singapore to meet clients’ needs for flexibility; a comprehensive products & services platform; and front-to-back office digitalisation.

Despite the disruptions caused by the COVID-19 pandemic, Cathay was able to launch its private banking office in Singapore in 2021, providing a flexible solution and complementing the onshore asset allocation with offshore options.

In terms of products and services, the private bank’s private equity funds platform has played an important role helping clients identify attractive private equity opportunities in a low-yield environment. The bank capitalised on the strengths of its group-wide capabilities: being under the Cathay Financial Group umbrella, it has gained access to multiple international fund managers

Robert Fuh CEO private banking, Cathay United Bank

“2021 marks another successful year for Cathay United Bank private banking with a significant double-digit growth rate in AUM and profit. Winning the APB award for the third consecutive year recognises our strategic commitment to delivering an exceptional customer experience.

As we move into 2022, we will strive to build solid business for our valuable clients through onshore and offshore platform optimisation, customer-centric tailor-made solutions via both traditional and alternative investment vehicles, and deep industry expertise.”

- Robert Fuh, CEO private banking, Cathay United Bank

and attractive private deals. Together with its venture capital arm, Cathay Venture Inc., and asset management subsidiary Conning Asset management, the firm offers direct investment opportunities such as pre-IPO deals and privately-listed REITs.

The bank works with external parties to provide trust planning services and wealth inheritance advice — a solution much sought after by Taiwanese entrepreneurs as many are on the cusp of transferring their wealth to the next generation and drafting succession plans.

As the first Taiwanese domestic bank to adopt Avaloq’s digital banking system in late 2020, the bank spared no effort to transform its digital infrastructure in a bid to accelerate its operational efficiency and enhance the client experience.

Cathay United Bank has been named Asian Private Banker’s Best Domestic Private Bank – Taiwan for 2021.

BANK JULIUS BAER

Julius Baer’s focus on developing holistic solutions for the Global Indian market, whether onshore or out of one of several offshore hubs, helped deliver a muscular business performance in this segment during 2021.

Many of those efforts over the last 12 months or so have been guided by Rahul Malhotra, who joined Julius Baer in mid-2021 to spearhead a strategy to capture more of the non-resident Indian (NRI) and onshore India wealth markets.

Malhotra's priorities have been boosting the connections between the onshore and NRI businesses; sharpening Julius Baer’s focus on Indian family offices and up-andcoming technology entrepreneurs; and increasing the bank’s proposition across advisory, bespoke solutions and other products.

On many counts, the bank has succeeded in the aforementioned areas. Julius Baer in 2021 successfully solidified its position as the private bank of choice for wealthy Indian families, of which more than half have been a client of the lender for more than five years. Geographically, building out the Middle East offshore hub of Dubai has been a strategic priority for Malhotra and Julius Baer.

Among the initiatives that Julius Baer has implemented to take advantage of synergies between the onshore and NRI markets are a broadening of the bank’s suite of onshore products targeted at offshore Indian clients, such as providing access to third-party India-focused funds and foreign portfolio investor (FPI) registration. For wealthy investors onshore looking to access offshore markets, Julius Baer is helping clients to navigate crossborder complexities through efforts such as setting up a dedicated liberalised remittance scheme desk in both Singapore and Zurich.

Rahul Malhotra head Private Banking Global India & Developed Markets, Bank Julius Baer

“We are delighted to receive the Best Private Bank – Global Indians award for the second consecutive year. This award is testament to the strength of our global India franchise, the success of our business model, unwavering support of clients, and the dedication of our talented team to sustain a relentless client focus in everything we do.

We will make the most of the unique advantages of our platform to bring the best of Julius Baer to our clients, and to consolidate our position as the largest foreign wealth manager and market leader in India.”

- Rahul Malhotra, head Private Banking Global India & Developed Markets,Bank Julius Baer

All of those efforts paid off in the form of strong business performance across Julius Baer’s India-focused operations. In the period of performance reviewed by the judging panel, the bank’s AUM, net new money and revenue contribution from its NRI and onshore India businesses all grew at market-leading rates.

While the bank’s team of RMs serving the onshore India market may not be the largest for this client segment, it is one of the most experienced, with an average tenure of 13 years at Julius Baer. They are complemented by RMs serving the NRI market from offshore hubs such as Dubai, Singapore and Zurich.

For these reasons, Bank Julius Baer has been named Asian Private Banker’s Best Private Bank – Global Indians for 2021.