Investment

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From a portfolio perspective, how important will (a) Chinese assets and (b) alternative investments be for delivering clients’ objectives over the next five years?

Benjamin Cavalli, Credit Suisse Private Banking Asia Pacific

Accessing onshore wealth across Asia can be complex due to varied business and regulatory environments in this vastly heterogeneous region.

At Credit Suisse, we believe in having a strong onshore strategy, which will continue to be a top priority for us.

We have been expanding our regional footprint into onshore markets and now have the most diversified onshore/offshore footprint in the industry, and are well positioned to capture opportunities in the region.

Beyond the Hong Kong and Singapore regional wealth hubs, we have built very successful onshore businesses for over 10 years in the largest wealth markets in the region. 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 clients through our international hubs.

We are the only true global player that is welldiversified in APAC as we are geographically spread across the whole region.

We will continue to evaluate opportunities to make the most of our well-established investment banking footprint across the region, where it has a decadeslong history in most markets. Another key focus is to cement our position as the “Bank for Entrepreneurs” in every market.

Vincent Chui, Morgan Stanley Bank Asia Limited

Historically, “onshoring” for international banks in wealth management has been a challenging task. For those that have had a long presence in key onshore markets such as Japan, Taiwan, Korea and India, their market share remains dwarfed by the big local onshore banks.

Would emerging onshore opportunities in China or Thailand be different? Maybe, and different banks have different regulatory risk appetites and resources to explore onshore opportunities. For the UHNW segment, customers have very distinct onshore and offshore needs. International banks are in an excellent position to satisfy their offshore needs and, through collaboration with onshore players, can provide global products white-labelled as onshore products. As these economies grow and the number and size of the UHNW segment expands, there are more than enough opportunities for international banks to operate an offshore model profitably in the next five years.

Cedric Lizin, Standard Chartered Bank

We see the trend of more individuals keeping their wealth onshore in Asia. We are looking at two opportunities in this respect: expanding onshore and offering offshore solutions based on onshore assets.

Many HNW individuals have their businesses and assets onshore and need funding and wealth advice. This presents tremendous opportunities for Standard Chartered as we have had an onshore presence in many markets in Asia for a long time — some for more than 160 years. Our onshore Commercial Banking and Corporate Banking businesses for example already cover the businesses of many HNWIs and UHNWIs.

Today, we have a wealth management offering in 13 Asian retail markets onshore on top of a global private banking offering. We are considering the needs of our affluent and HNW/UHNW clients holistically in order to provide an integrated offering to service this continuum of clients.

We are also exploring onshore JV opportunities with local players in a couple of markets in Asia.

Thanks to Standard Chartered’s extensive onshore presence in emerging markets, we are already offering solutions to clients where they can make investments offshore based on their assets onshore. We are working on expanding such solutions.

Steven Lo, Citi Private Bank Asia Pacific

Citi has an onshore setup in Hong Kong, Singapore, and India where we serve clients from around the region. Setting up operations onshore is a serious endeavour and not to be taken lightly. It cannot be a “hobby”. The challenge in making an onshore operations viable is to ensure that you have enough product and service differentiation to compete in that local space. For instance, take the Greater Bay area. We could look at a potential local setup there because we can draw on the strength of the insights and experience of our Citi network, which already has a presence there.

Terence Chow, RBC Wealth Management Asia

In Singapore, the industry and government have been making it more attractive for family offices to move their operations onshore. The point is not necessarily to bring all assets onshore, but to create a hub for family offices to operate and thrive. The industry and government have been very accommodative and innovative with new structures such as Variable Capital Companies (VCC), which attract capital that may have otherwise been used within an offshore fund.

A number of wealthy families from around the world have chosen Singapore and Hong Kong as their new or alternate home bases in the region in order to access local markets and talent and to benefit from preferential tax treatment.

Hong Kong is already an onshore market due to both domestic Hong Kong SAR wealth and the accelerated inflow of Chinese wealth from individuals who are coming to live in Hong Kong, and the outlook is extremely positive. Through the A share Stock Connect scheme, and as the GBA Wealth Management Connect scheme evolves, Hong Kong should thrive as a hybrid onshore-offshore market.

Michael Blake, UBP

International wealth management remains our core proposition: we see increasing flows to international financial centres, particularly Hong Kong and Singapore, supported by the growth of family offices in the region and the continued internationalisation of regional wealth.

At the same time, we retain an open mind about domestic partnership opportunities. Local client proximity combined with international investment expertise is a winning combination on paper. The question is how best – and with whom – to bring it to life.

Nitin Jain, Edelweiss Wealth Management

The Indian wealth management industry is largely an onshore business due to capital account convertibility restrictions.

Indians have historically been big investors in traditional asset classes like real estate and gold, and

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it is only now they are beginning to understand the value of asset allocation and diversification.

Alternatives as an asset class are beginning to emerge, and Indian investors – both institutional and individuals who have had very limited exposure to the private markets – are beginning to take interest.

Anupam Guha, ICICI Securities Limited

ICICI Securities is predominantly an onshore player. We see India as a large market with huge opportunities for growth. Our focus, therefore, has been on Global Indians. We have our digital platform at the core of our proposition, well complimented by RMs in a hybrid model of execution.

In advisory business, we are moving towards more value-added services – straddling the financial and non-financial needs of our clients – including estate planning, tax advisory, etc.

Lok Yim, Deutsche Bank

We combined our Wealth Management and Private and Commercial Business International units into a new International Private Bank in June 2020, serving 3.4 million private, wealth and commercial clients. The International Private Bank brings together Wealth Management’s globally connected clients across Germany, Europe, the Americas, Asia and the Middle East and Africa, along with private clients and small and mediumsized enterprises in Italy, Spain, Belgium and India. The business has around €250 billion of assets under management and a combined revenue of approximately €3 billion.

Combining our internationally focused Private Bank businesses is allowing us to make the most of each other’s strengths and develop our market share within and across local markets. We will be able to provide greater access for private banking clients to our wealth management capabilities and to combine forces to offer superior digital services to our private, wealth and commercial clients.

Shang Xiao, CreditEase Wealth Management

Because of the pandemic and SinoUS trade tensions, customers prefer investments in defensive assets and believe China is a better choice relative to the US. Customers are more aware of the importance of long-term asset allocation of primary market and alternative investments by value investing. Meanwhile, we found that customers care more about health insurance plans and enterprise sustainability. Are they sufficiently prepared? Can their enterprise be passed on smoothly to the next generation? These uncertainties for the future can be solved through our Family Office inheritance scheme.

On the other hand, most wealth management institutions are in the process of transforming and digitalising. In the past few years, CreditEase accumulated its own experience as a financial technology enterprise, which we can share with traditional institutions to empower them to execute a smooth transition.

Arnaud Tellier, BNP Paribas Wealth Management

Onshoring is definitely a longterm wealth trend and gaining momentum in Asia. Local players have become more sophisticated. BNP Paribas has a long-term presence in most major Asian countries and we will make the most of this presence strategically in key markets across Asia over time.

We already have a strong onshore presence in Taiwan and are looking to implement best practices from our successes there, as we implement a model, unique to each onshore market.

Joseph Poon, DBS Private Bank

Asia remains the outstanding region for wealth creation and management. ASEAN in particular is starting to shine, due to factors such as the reshoring of supply chains to certain markets in the region, and rising affluence driving domestic consumption.

Since last September, we have been collaborating with our onshore business in Thailand to provide Thai HNWIs access to our private banking offering in Singapore. Beyond access to global investment opportunities, this allows them a means to diversify their existing investment portfolio. It’s still early days, but response has been positive and we are on track to meet our growth target of doubling our wealth AUM in Thailand from SG$4 billion to SG$8 billion by 2023.

The other exciting market for us is the Philippines. We kicked off some discussions in 2019 and are still in the midst of structuring the best way to tap on the growing onshore HNWIs’ increasing investment appetite, and giving them access to our established wealth management platform in Singapore.

More clients are looking to Singapore as a lighthouse from which to assess and invest in regional opportunities. DBS, as Singapore’s leading bank with a strong Asian footprint, network and expertise, stands well placed to advise, support and partner them on this journey.

Omar Shokur, Indosuez Wealth Management

In terms of wealth management in Asia, we continue to firmly believe in the offshore markets model, predominantly served by the offshore hubs of Hong Kong and Singapore. The laws and regulations in place, the presence of solid regulators, and the depth and breadth of the available talent pool are all important ingredients for clients to choose these markets. Whilst clients may opt to do their day-to-day banking onshore, we believe that for their long-term wealth planning and structuring, they will continue to flock to these well established offshore centres.

Tan Siew Meng, HSBC Private Banking Asia

We are proactively extending our footprint in Asia, particularly in mainland China and ASEAN. I believe strategically growing our onshore presence can certainly open up material opportunities to serve the fast-growing and increasingly sophisticated private wealth and business needs of new and existing clients. Having this connectivity is central to our growth in Asia which is key to delivering our ambition to become the No. 1 wealth manager in the region.

Wang Ya, Private Banking Centre of Bank of China

Mainland China remains the most important growth opportunity for the wealth management industry, with the ongoing development of the Greater Bay Area (GBA) cited as a key driver. The announcement of the launch of a Wealth Management Connect Scheme in the GBA is a positive step, although the needs of domestic investors, especially those in mainland China, are still maturing.

On 18 December 2020, Bank of China Private Banking released the Report on Family Wealth Management of Chinese Entrepreneurs. The research found that the wealth management needs of (ultra) high-net-worth individuals represented by Chinese entrepreneurs are becoming more comprehensive and diversified. To be specific, their wealth management needs have been gradually expanding from the personal wealth preservation and appreciation to family wealth protection, management, governance and inheritance, considering all family members as a whole. Customer demand is constantly evolving, and the industry pattern on the supply side is still being explored. It can be said that this is an immense opportunity for the entire wealth management and private banking industry.

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What key investment themes shape your bank’s 2021 outlook — and why?

Tee Fong Seng, Pictet Wealth Management Asia

Our key investment themes for 2021 are premised on the idea of a synchronised economic and corporate earnings growth. A big rebound in earnings for cyclicals and energy stocks, leading to a market rotation away from the winners of the pandemic.

We think smaller caps will do well in this broadening recovery and that M&A will pick up. At the same time, we continue to like big internet stocks, whose growth momentum we believe will remain strong. The shape of recovery plans means that infrastructure and environmentally themed investments will be in vogue. We believe that hedge fund strategies like Macro and Event-driven will shine again, as volatility and dispersion between and within markets rise again. Developed-market government bonds stand to deliver negative returns, but we still see select areas of interest in credit and emerging-market bonds.

We believe China’s robust recovery will continue in 2021, when we expect fullyear growth to be 9.3% compared with 2.1% in 2020. But within a broad EM recovery, we believe country selection will be especially important, because not all economies are equal. We expect emerging-market currencies, including the RMB, to make headway against the US dollar, which is set to weaken.

Benjamin Cavalli, Credit Suisse Private Banking Asia Pacific

The pandemic situation has generated more client interest in a professional and dedicated portfolio. On the investment front, we will continue to stay close to our clients and provide de-risking investment strategies as well as selective positioning in blue-chip equity, gold and investment-grade bond. We often advise our clients not to time the market but to focus on value.

This underpins the importance of having managed solutions as a core part of portfolio construction for sustainable returns, downside risk mitigation and efficient participation in specific markets, sectors or themes. We are looking into a diverse set of investment opportunities, including an ecosystem enabled with the explosive growth trends — global 5G connectivity, China healthcare that is supported by demographic change, as well as education technology that has a strong investment case, as evidenced by its growth during the pandemic.

We continue to build on our annual Credit Suisse flagship private equity programme, which offers a multi-strategy private equity solution that serves as a building block for our client’s alternatives allocation.

Vincent Chui, Morgan Stanley Bank Asia Limited

It's a V shaped recovery – keep the faith. Rising COVID-19 cases are a risk but we think this global recovery is sustainable, synchronous and supported by policy, following much of the 'normal' post-recession playbook. Overweight equities and credit against cash and government bonds, and sell USD. Be patient in commodities; we think that index-level returns will be back-loaded.

Simon Godfrey, EFG Bank

Looking forward, there are prospects for a global economic recovery in 2021, which should support corporate earnings, notably in cyclical areas which suffered in 2020. Other equity themes will see a continuation of trends, such as healthcare, the climate challenge and changing consumer habits. Active management will be able to differentiate between the winners and losers.

Within fixed income, we see little potential from investment grade rates and spreads, except in emerging markets and tactically within high yield. Risks are increasing however, with robust valuations in major markets and the positive economic outlook still being contingent on success in combatting COVID-19.

Cedric Lizin, Standard Chartered Bank

There are five factors that will define the financial markets in 2021: vaccine distribution, fiscal and monetary policy support, bond yields, the US dollar, and the value versus growth debate. From these, we have drawn several key cyclical and structural themes:

Cyclical themes

Vaccinating against valuations: Rapid vaccine development suggests 2021 is likely to be a better year than 2020. We expect equities, credit and multi-asset income strategies to perform well.

Race for income: Investors are likely to become increasingly innovative when it comes to searching for yield. Therefore, we believe diversified multi-asset income allocation is likely to perform well.

Ready, steady, rotate: We expect Value equities to start to outperform Growth and Quality equities. Accelerating economic growth is a key positive driver, though any rise in bond yields is likely to be contained.

USD to slump in 2021: We expect USD weakness to extend into 2021. A weak USD is generally good for investment returns as a whole, especially for Emerging Market assets.

Structural themes

Golden equity themes for 2020s: The next wave of innovation is expected to be driven by permanent changes brought about by COVID-19 in medical tech, Internet-of-Things (IoT) and e-vehicle technology breakthroughs.

The time for climate investing: Many factors support the current momentum behind climate investing, including the change in US political leadership. We see four top themes in this space: circular economy, sustainable food, water and a focus on energy transition.

In a world of yield-free risk: Generating returns and ensuring downside protection is becoming more challenging. We believe investors will need to take additional risks and/or become more innovative.

Anirudha Taparia, IIFL Wealth Management Ltd

Risk mitigation will take precedence in 2021 and beyond. This will make controlling volatility a top priority for all portfolios. Investors can follow a core and satellite approach to portfolio construction. This approach entails designing a portfolio with a core investment, which represents the largest portion of the portfolio and various satellite investments which are smaller in size.

The premise is that the core portion of the portfolio is invested in relatively safer investments while the satellites can be invested in investments that can

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potentially generate higher returns. This ensures that the portfolio is designed in such a way that it increases the chances of generating the best risk-adjusted returns, keeping in mind the risk-appetite of the investor.

Another theme that is expected to emerge in 2021 is renewed focus on alternative investments. With low interest rates and yields dropping further, investors will increasingly gravitate towards alternatives including Real Estate Investment Trusts (REITS) and structured products like Market-Linked Debentures (MLDs). We are looking at providing clients an opportunity to invest in select breakout companies in health tech, EdTech, fintech and other promising sectors through a fund of funds, which will invest in AIFs that provide follow on capital to such tech companies.

Rishabh Saksena, Bank Julius Baer

Against the macro backdrop of an on-track global economic recovery, backed by unprecedented fiscal and monetary policy support, our preference is for cyclicals and select value stocks, along with a continued focus on IT stocks. On the thematic side, we favour cybersecurity, digital health & life sciences segments. The focus on China will be across asset classes (equities, bonds and currency), with the continuing economic recovery and the new Five -Year Plan as performance catalysts. In the fixed income space, emerging markets hard currency bonds as well cross–over USD bonds offer selective opportunities. Smart energy and smart mobility themes provide opportunities within the sustainable investments spectrum, and alternative investment strategies do so from a diversification perspective.

Steven Lo, Citi Private Bank Asia Pacific

Our core positioning for 2021 is to ensure clients are fully invested, with a strong overweight to equities at the expense of fixed income. From a thematic standpoint, we are focusing on mean reversion for assets that have underperformed during the pandemic as the world normalises. We also focus on the evolution of the G2 world – China and the US – and its implications for investment opportunities elsewhere. From a thematic build, we retain our focus on “disruptive forces” in technology, healthcare, financial services and transportation.

Terence Chow, RBC Wealth Management Asia

Equity investment attitudes in 2020 were mostly shaped by the pandemic and by scepticism that life and the economy would ever be the same. In our view, the economic damage of COVID-19 will diminish greatly through 2021, while confidence in a return to a recognisable social and business landscape grows in parallel. Earnings, already in recovery, could surprise to the upside in 2021 and 2022 as some sectors and groups, crippled by the pandemic, return to life. The strong rebound off the deep March market lows suggests to us that investors have already paid in advance for some of that expected return to “normal.” For 12–18 months following the end of a recession, there is usually rapid catch-up growth in both GDP and corporate profits. Thereafter, GDP expansion settles into a trajectory more closely aligned to the economy’s longer-term potential growth rate.

The biggest themes that we see playing out in 2021 are, without a doubt, sustainability and the Greater Bay Area.

Zhao Yue, Private Banking Department of China Merchants Bank

We anticipate that the global economy will enter a phase of resonant recovery in 2021, with further growth in consumption and production. Major overseas economies will probably maintain accommodative monetary and fiscal policies in order to boost economic growth and increase the employment rate. As for major categories of assets, we are optimistic about commodities benefiting from economic recovery and inflation, followed by stocks as the result of improved earnings. However, the bond market may be constrained to a certain extent.

Nitin Jain, Edelweiss Wealth Management

i) Increasing allocation to alternatives: with the low interest rate regime and the focus on diversification, India alternatives are taking off in a major way – whether private equity funds, private debt funds, or hedge funds. This will be an important theme for the next decade as clients are looking at opportunities in this space.

ii) Diversification into dollar assets: slowly and steadily, Indian clients are becoming more aware of the need to move away from single currency assets, and have started to evaluate opportunities across the globe.

iii) Focus on risk & volatility management: the events of last six to nine months have highlighted once again the importance of risk management in portfolios. Increasingly clients have started to value advice and solutions focused not only on returns but also on risk.

Anupam Guha, ICICI Securities Limited

Portfolio investing approach: we are a proponent of portfolio investing to achieve better risk-adjusted return for our clients. We have created ready-made portfolio baskets of direct equity/ ETF/mutual funds/bonds/gold for our investors to invest. We have created an PMS and alternate basket of products which spans asset classes, portfolio concentration and investment themes. We have made the entire product basket available online through our platform.

Global investment: our clients are looking to diversify their portfolio across geographies. We have created a global investment platform to provide a seamless remittance and investment solution to our clients.

Changing fee structure: in response to the growing trend in commissions in mutual funds, we have been consciously moving towards a flat fee based platform for mutual funds investments.

Passive investing: as passive investing continues to garner interest in the investor community, our in-house asset management business is focusing on factorbased, smart beta, low cost passive portfolios.

Shang Xiao, CreditEase Wealth Management

A vaccination rollout will release suppressed supply and demand and endogenous growth momentum. The US, Europe, and China are basically at the bottom of the inventory cycle and may take the initiative to replenish their inventories in 2021, boosting the global economic recovery.

With the new normal of the pandemic and the administering of vaccines in developed countries, global demand in 2021 will increase significantly, so that China's economy will develop from export substitution to demand-driven.

We will comply with official policy regarding the technical innovation in China's structural reform. We will focus on the development of strategic emerging industries, modern service industries, infrastructure construction, digitalisation, new energy, and other fields under technical innovation in China's structural reforms. We will optimise the indirect financing structure in the financial capital market, increase the share of direct financing, open up related asset categories, and expand domestic demand for various types of consumer investment.

We will seize the asset rotation opportunities in the global economic recovery cycle in 2021: stocks → commodities → bonds → gold → cash.

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We recommend a focus on strong profitability stocks of star companies. The banking and non-banking financial sectors, especially those with lower valuations, may outperform the market significantly in 2021. The opportunity of excess returns in the Chinese stock market lies in those that are less dependent on external factors in terms of maintaining their profitability, and we will recommend our clients to focus on star companies.

In 2021, China will enter the stage of "broad currency and tight credit" and its bond market will be in a bull market phase. We prefer RMB assets. In the long run, the proportion of RMB assets in global asset allocation will continue to increase. It is expected that RMB may continue to appreciate in 2021, but the market is not sustainable and relies more on the fluctuation of USD.

Vaccines are expected to become widely used in emerging markets in the 3Q21, which may stimulate the rapid growth of their economies. We should pay attention to the good control of the pandemic situation and rely on the recovery of larger emerging market economies for services, tourism and commodity exports.

Arnaud Tellier, BNP Paribas Wealth Management

Our key investment themes in 2021 focus on economic recovery, on the back of COVID-19 vaccine developments, a strong expected earnings rebound for corporates, as well as continued support for financial markets from a combination of monetary and fiscal stimulus.

There is the short-term tactical theme “Vaccine, Recovery & Reflation” which plays the cyclical recovery of the global economy. Then, we have three mediumterm portfolio balanced themes, offering diversified solutions for this record low yield environment, such as low volatility absolute return, investing in “fallen angel” credit and Asia/EM local/USD bonds, as well as the importance of a new balanced diversification by adding alternative investments.

For the longer term, we include four structural megatrend themes all benefiting from China’s opening up of capital markets and economic reform, new consumption habits in a post lockdown world, improving quality of life, and smart technologies. Lastly, there are two long-term ESG themes about energy transition and investing in companies with strong governance and profitability.

Joseph Poon, DBS Private Bank

2021 is going to be a year of recovery. Positive developments on the vaccine front have triggered a rotation to “value” plays in global equities; geared towards beneficiaries, including travel related industries, banks, and energy corporations. Importantly, the recent switch to “value” signals a broadening of the market rally, underlining its sustainability.

We continue to advocate staying invested with a Barbell Strategy, holding overweight exposures in growth equities on one end, and income assets on the other. On the growth side of the portfolio, we advocate investing into I.D.E.A. companies – the Innovators, Disruptors, Enablers, and Adapters. These companies will thrive in a world that is fast transforming into a digital economy.

Additionally, we recommend exposure to “Vaccine Winners”, referring to companies that had been hit hard by the pandemic, but are now poised for rebound as vaccination for COVID-19 may soon become a reality. On the income side of the barbell, we suggest clients stay with BB/BBB-rated bonds and dividend-yielding stocks, including Singapore REITs.

Omar Shokur, Indosuez Wealth Management

For equities, we have adopted an overweight view around the US elections and reinforced that view with the perspective of a vaccine being distributed in 1H21. We remain positive on secular growth, but are progressively rebalancing portfolios towards a barbell approach with a greater exposure on cyclical and value stocks. We are increasing our conviction on high beta regions such as Europe and global emerging markets and China.

With regards to fixed income, we anticipate a moderate steepening of US yield curves, notably as we progress towards a vaccination. However, the absence of a blue wave, and less fiscal stimulus needed if a vaccine is distributed should limit the magnitude of steepening. EUR curves should remain close to current levels with low inflation and strong action by the ECB. We remain constructive on carry strategies on investment grade and high yield. We remain constructive on emerging debt — we keep a preference for Asia, but highlight that flows could positively affect Latin America and Eastern Europe, as well as local currency bonds in 2021.

On currencies, we expect moderate dollar weakening against EUR, a constructive long-term view on RMB, more momentum on EM currencies, but more visibility and probably a better risk adjusted trade on Asian currencies.

Gold weakness should remain strategically supported by our expectation of a weakening US dollar. Acceleration above US$1,950 seems unlikely in this constructive environment, but any movement towards the 200-day moving average US$1,800 could be exploited. Lastly, we expect a moderate rebound of commodities in general.

Tan Siew Meng, HSBC Private Banking Asia

Looking ahead to 2021, our investment strategy positions for a synchronised and broadening economic recovery and rebuilding after the COVID-19 pandemic. We expect that the global vaccine rollout, continued ultra-loose monetary policy, new fiscal stimulus, abundant liquidity, and strong earnings recovery will enhance the return outlook for risk assets.

Our top four trends for 2021 focus on the most important macro and market developments that will impact asset prices, which are: recharging Asia’s Growth; Recovering in a Low Yield World; Digital Transformation; and Investing for a Sustainable Future.

August Hatecke, UBS Global Wealth Management

We are bullish about 2021 and are overweight equities. We believe the vaccine rollout and supportive central banks will drive equity markets higher.

Catch-up or laggard plays represent near term opportunities as economies slowly return to normal.

These include US mid-caps, European small-mid caps, select financials, energy, industrials and consumer discretionary. Asia ex-Japan is a key catchup trade with earnings growth forecast to rebound to 23% in 2021 and growth broadening out from North Asia to ASEAN.

We are excited about what we call The Next Big Thing, which is about identifying major trends and participating early in their exponential growth. We believe that 5G, healthtech, greentech, fintech themes are must-haves for our clients’ portfolios. Diversifying away from current industry leaders into the next growth areas is important for our clients’ portfolios.

Sustainable Investing is another must-have. We have been early advocates for SI investing and in 2020 we declared our SI mandate as our preferred solution for our clients. We believe that green innovation will bring great opportunities and ESG investing will help screen for better governed companies to invest in. We believe that the Hunt for Yield will continue with low interest rates here to stay for the foreseeable future. Investors can consider enhancing returns via equities, structured solutions and alternative credit in private markets.

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UBS My Way: My Way is an innovative, first-of-its-kind creation in the industry.

My Way is more than a product, it offers a whole new client experience by bridging the advisory and discretionary worlds. It is digital and powered by an all new iPad app. It allows our clients, together with your help, to build their own fully personalised portfolios from more than 40 different building blocks and hand over the responsibility of every day investment decisions to some of our best portfolio managers.

With My Way, clients can express their individual investment views, while still ensuring the UBS House View is reflected and their individual risk/return tolerances are retained.

Not only our clients, our client advisors benefit too because we help them work more effectively. Our CAs will now need less time now to prepare documentation on any portfolio changes, the app does it for them.

Wang Ya, Private Banking Centre of Bank of China

In the context of the global economy entering the post-pandemic era in 2021, our analysis is based on a review of valuation, economic growth, and macroeconomic policies. We suggest that investors focus on commodities, equity, gold, and bonds in 2021. In terms of global stock market, more attention should be paid to the convergence and regression to fundamentals. The demand for crude oil is likely to pick up due to the global recovery environment.

Neo Teng Hwee, UOB Private Banking

2020 has been exceptional in more ways than one. From the COVID-19 pandemic to a global recession and extended market uncertainty, the year has been unlike any other in recent memory. As we embark on a new year, UOB Private Bank expects a definitive, albeit uneven, recovery. The pickup will be anchored by the COVID-19 vaccine developments and better control of the healthcare crisis, an improved geopolitical environment in view of a new US administration, as well as stronger investment sentiments. In fact, the latest IMF forecast for global GDP growth in 2021 is 5.2% — a strong upward revision from an earlier forecast of a 4.4% decline in 2020.

That said, the sharp acceleration in COVID-19 cases in recent months and tighter movement restrictions in several major economies will continue to weigh on the global growth recovery. This is why we believe ongoing aggressive monetary policy accommodation and fiscal support are necessary to limit the deterioration of the global economy. We expect central banks in the developed economies to err on the side of reflation, with a proactive lag on improvement in growth conditions, as explained by the US Fed’s adoption of the “average inflation target”. Any premature material rise in bond yields will likely prompt aggressive counteractions by the Fed and other central banks, in the form of bond purchases, to ensure sustained economic expansion.

The uplift in sentiments, coupled with continued fiscal support, will point to a certain, albeit slow recovery of the global economy in 2021. In view of these expectations, UOB Private Bank has upgraded our call on the broad asset class of global equities from neutral to overweight since November 2020. In particular, we have moved US equities from underweight to a neutral position, as we expect the relative performance of US stocks to shift towards sectors which have been most negatively impacted by the pandemic. Growth stocks in sectors such as technology, which are defensive against the economic fallout, are trading at relatively high valuations and could underperform their value counterparts in sectors such as financials, industrials, materials and renewable energy.

Nonetheless, interest in technology will continue and the sector remains an attractive long-term investment opportunity given its cyclical nature. Technology hardware will likely see better performance when they price in the anticipated strong gains arising from a global economic recovery. As digitalisation will continue to change the way we live, work and play, we recommend that investors seek opportunities in technology companies with robust fundamentals while trading at sustainable valuations.

While we have upgraded US equities from underweight to neutral, we continue to maintain our overweight calls on emerging Asia and Japan equities. Investors should also consider shifting some assets from North Asia to Southeast Asia equities which have been the laggards due to the impact of the pandemic.

UOB Private Bank views China’s economic recovery and medium- to longterm growth story as a convincing thematic investment trend. In particular, we see opportunities in China’s technology sector. In its recent formulation of the 14th Five -Year Plan for National Economic and Social Development and the Long-Range Objectives Through 2035, China highlighted that innovation will be instrumental in building a modernised economy. The rapid adoption of 5G technology will present numerous investment ideas and opportunities as China reshapes the global technology landscape.

Amid the continued uncertainties, we continue to advise our clients to remain invested for the long term and to maintain portfolio diversification to manage market and concentration risks.

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What important steps did your bank take to drive the sustainable investing agenda and to increase access to sustainable investing opportunities in 2020?

Tee Fong Seng, Pictet Wealth Management Asia

At Pictet, we have adopted the term Responsible Investing, as it represents the breadth of the investment opportunity, while at the same time capturing its primary objective: to invest responsibly, regardless of what one’s personal definition of that may be. Responsible Investing presents a broad spectrum of investment options, from Environmental, Social and Governance (ESG) integration (where ESG factors are included in traditional financial analysis) to impact investing (where meeting a goal with social benefits is prioritised ahead of financial returns). Responsible Investing inherently includes the preservation and improvement of the world that our future generations will inherit. A rich life is one with not only financial means, but also family, health, security and stability, and we must ensure that future generations can enjoy life’s richness tomorrow as we do today.

We are seeing a trend amongst UHNWI to embed responsibility or ESG more holistically throughout the management of their wealth. We have responded to this need by launching a dedicated offering, which combines different approaches available on the market today spanning ESG integration & active ownership, sustainability themes and impact investing.

Benjamin Cavalli, Credit Suisse Private Banking Asia Pacific

We believe that the next drivers of solutions growth at Credit Suisse will sit with our newly formed Sustainability, Research, & Investment Solutions (SRI) global corporate function, which will allow for a more systematic rollout of — and a larger focus on — impact investment opportunities.

Within SRI, our Sustainability Strategy, Advisory and Finance (SSAF) unit combines all of Credit Suisse's investment activities in sustainable investing around the globe within one organisation, while defining the firm's sustainability strategy relating to these efforts. They will facilitate investable projects and initiatives that have a positive economic and social impact, focusing primarily on generating solid financial returns for clients.

We aim to include environmental and social considerations in the development of our product and service offerings in order to meet the interests and needs of our clients and to capitalise on business opportunities.

Dedicated specialist units in various parts of our business are developing products and services that generate environmental and/or social benefits. These include investment opportunities relating to renewable energy, climate change and financial inclusion, among others.

In Asia Pacific, our key focus will be on solutions that support Asian SMEs in becoming market leaders in agriculture, healthcare, affordable housing and education. We will continue investing in companies that work towards making a positive impact on the environment, and in particular, the ocean.

Simon Godfrey, EFG Bank

Sustainable investing has been on our agenda well before this year, though the explosion in investor consciousness has been more recent, notably in this region and we are well positioned to meet this demand. Changes in the international political landscape are also important drivers for the next year. Our affiliated asset manager, EFG Asset Management is already integrating ESG criteria into its stock selection and our global mutual fund research unit categorises funds according to their ESG credentials — which is essential when advising clients who are sensitive to these factors. We will be more visible in this space, adapting our offer to regional investment tastes and sensibilities.

Cedric Lizin, Standard Chartered Bank

Sustainable investing has been a key agenda for Standard Chartered Private Bank for several years now. This aligns with the broader bank’s sustainability aspirations.

In 2020, we anticipated the need for additional due diligence to mitigate ESG washing given the proliferation of ESG solutions in the market. We therefore launched ESG Select, which is our framework to help us more systematically and rigorously review ESG products.

We expanded our product shelf, including additional climate-themed and SDGthemed investment opportunities and making them available to both private and retail banking investors. Investors can access a range of sustainable investing strategies on our platform, from best-in-class ESG investing to key sustainable thematic.

An innovative but simple solution we launched for private banking clients was Sustainable Deposits, which was first launched to our corporate and institutional clients. Sustainable Deposits are term deposits which allow clients to have their capital referenced against sustainable assets of Standard Chartered (e.g. green financing, sustainable infrastructure projects, microfinance, etc.).

Most recently, the bank launched the first Singapore dollars sustainable time deposit to private and retail clients in Singapore.

Colleague training remains key to enabling quality conversations with clients. We mainstreamed our sustainable investing training programmes and most colleagues are now trained in the basic concepts of ESG.

Rishabh Saksena, Bank Julius Baer

Sustainable investing has been centre stage of our Responsible Investments focus. ESG factors have been incorporated in our product selection processes, and we made available to our clients both in-house mandate solutions as well as third party offerings.

As an example, one of the recent solutions offered in this space targets three UN Sustainable Development Goals: sustainable food production, climate transition and life below water (the “Blue Economy”).

Steven Lo, Citi Private Bank Asia Pacific

We continue to develop new capabilities on our platform, ranging from innovative capital markets trading solutions, third party manager capabilities, and within our own in-house discretionary portfolio management business. Investor education has been at the heart of many of our clients initiatives within the last two years, and will continue to be a key activity for us.

THE FINAL WORD

INVESTMENT

Terence Chow, RBC Wealth Management Asia

Technology has dominated the last ten years and we have seen a true transformation that has been accelerated by COVID-19. The arrival of 5G is supercharging the sector and it will set off a whole series of disruptions. The marriage of sustainability and technology, which we call SUSTECH, is where we see the most attractive opportunities, including in smart cities, electric vehicles, wind and solar power, waste management and water technology.

Michael Blake, UBP

In 2020, we have continued to broaden our sustainability agenda, both by strengthening our impact investing proposition and by launching several internal CSR initiatives. In Asia, we have launched a new emerging equity impact strategy to complement the existing global impact equity strategy and have a full agenda of initiatives for 2021 to ensure that we continue to build on this momentum.

Zhao Yue, Private Banking Department of China Merchants Bank

In compliance with regulatory requirements and market trends, we have vigorously promoted the NAV transformation of products and laid out a multi-layered product system, so as to ensure the diversity of products.

At the same time, we have upheld the philosophy of asset allocation and we are working hard to continuously improve asset allocation methods and provide multiple service models, such as tripartite decision-making and carte blanche, to achieve maintenance and appreciation of client assets.

Nitin Jain, Edelweiss Wealth Management

Over the last few years, we are starting to see more ESG awareness amongst our clients. We feel that this shift is structural, we have been very committed to this, and hence would like to be at the forefront of this agenda.

We launched an infrastructure fund which is completely ESG compliant and invests in roads, transmission, and the renewable energy space. This was the first of its kind in India and was very well accepted by our clients. We have provided our clients with access to ESG funds from our other partners who excel in ESG.

In addition, Edelweiss runs a foundation which continues to support philanthropic activities across India. We have been advising and partnering with our clients to participate in this philanthropic agenda.

Lok Yim, Deutsche Bank

We screen publicly traded securities by a combination of financial criteria and ESG factors, based on independent research and ratings, to make investments in line with our clients’ priorities and risk-return profile. Investments can be screened based on the strength of different factors relative to their industry peers. This enables us to work with our clients to identify opportunities that can have a positive impact on ESG issues while supporting the overall investment strategy.

In ESG investing, we hope to add purpose to performance. Making a positive impact does not have to mean compromising on performance. We hope to help our customers to build a portfolio that ensures their wealth is invested in line with both their financial objectives and particular ESG goals. We use four types of investing in which we integrate ESG factors into investment decisions and work continuously to develop and enhance our ESG capabilities. It includes 1) exclusionary screening — avoiding investing in companies or sectors that do not align with investor values or meet other norms or standards; 2) positive screening — actively seeking out companies deemed well-performing on certain ESG measures; 3) thematic — focusing on investments according to interest in specific ESG themes, such as clean energy, water, education or healthcare; 4) impact investing — investing in companies or funds with the intention of generating positive, measurable social and/or environmental impact, alongside a financial return.

In July, Deutsche Bank announced that it would conduct its sustainable finance and sustainable financial product activities in accordance with its Sustainable Finance Framework, which is aligned on a best effort basis to the EU Taxonomy. The Framework creates the basis for the bank to achieve its ambitious sustainability targets in accordance with credible criteria. We plan to increase its volume of sustainable financing and portfolio of ESG investments under management to over €200 billion in total by the end of 2025.

Shang Xiao, CreditEase Wealth Management

CreditEase Wealth Management advocates the notion that every high-net-worth client should invest 1% of his or her assets in charity, either through direct donations, low interest loans or sustainable investments, so that the wealth may contribute to the greater good. CreditEase Wealth Management offers tailor-made charitable projects to clients, based on their preferences, and helps clients realise their charitable aspirations with its professional resource coordination and project execution and management.

In 2020, CreditEase established the CreditEase Foundation, which has created an assortment of charity projects and established a variety of special charity funds. CreditEase Wealth Management has established impact investment funds, helping farmers to boost sales via live commerce.

CreditEase Wealth Management Private Equity Fund of Funds incorporates ESG into the evaluation system, covering key areas with great social impact, such as medical care and health, new infrastructure, low-carbon environmental protection, education and new consumption.

CreditEase Impact Funds, in the planning, will invest in social enterprises so that investors can obtain long-term and stable returns, and at the same time, support underprivileged groups.

Arnaud Tellier, BNP Paribas Wealth Management

We have accelerated the ESG integration into our products and services in 2020. We improved our proprietary ESG rating methodology by focusing more on metrics that drive investment performance and expanding the coverage universe from 3,000 issuers to 12,000 issuers.

We have incorporated ESG in all Discretionary Portfolio Management mandates and introduced new ESG funds, on themes such as energy transition or sustainable food. These have outperformed non-ESG funds, therefore we are seeing increased client interest to shift their wealth into sustainable investing.

Overall, ESG integration in our AUM has increased to 70%, in line with our target of 90%+ and our funds ESG penetration rate has increased by +20%.

We continue to provide structured sustainability training and educate our clientfacing staff (RMs & ICs). Building a sustainability culture in our organisation is paramount and we intend to make sustainable investing a Business as Usual.

THE FINAL WORD

INVESTMENT

Joseph Poon, DBS Private Bank

We continue to focus on client education and empowerment. Clients are regularly engaged through events such as our quarterly Windows of Philanthropy sessions, which cover topics such as venture philanthropy and ESG. We are ramping up ESG in our ongoing conversations with clients to boost their understanding of how they can play a positive part via their investments. We work closely with DBS Foundation, which is dedicated to championing social entrepreneurship in Asia, to identify opportunities for clients to give back to society and support social enterprises in scaling their impact.

We have integrated MSCI ESG Ratings into our wealth product suite. This provides clients with an “ESG” view of their investments, and empowers them to make more informed decisions.

We have relaunched our ESG Outperformance structured product following the success from the first tranche, which was launched in 2018 and boasts a ROI of over 70% YTD.

Staff training has been a key enabler for us as well. We stepped up the training of our RMs, and provide them with enhanced resources and tools to support clients in their sustainable investment journeys. We launched a series of ESG masterclass webinars for all front office staff in 2020, complemented with virtual classroomstyle trainings to entrench their knowledge on how sustainable investments play a part in our clients’ wealth building journeys.

Omar Shokur, Indosuez Wealth Management

This is at the forefront of our investment philosophy and has been the case well before this became a global trend. We believe it is for that exact reason we were the proud recipients of Asian Private Banker's ‘Best Private Bank - Sustainable Investments' award in 2019! 2020 saw the creation of a new division for our UHNW clients and family offices, cooperation between Indosuez Wealth Management and our Crédit Agricole Corporate and Investment Bank (CACIB). This division will focus heavily on socially responsible investment solutions, green finance and philanthropy.

Moreover, we have set ourselves the goal of working towards a 100% ESG product range in our managed mandates by 2022. We are launching a specific 'People & Planet' mandate and we have significantly expanded our clients' access to green structured products. Moreover, we are actively working on the integration of ESG criteria in our credit processes. Lastly, we have significantly expanded our fund offering in this area, covering the themes of ecological & energy transition, sustainable development, preservation of natural resources, etc.

Tan Siew Meng, HSBC Private Banking Asia

HSBC’s latest climate ambition is to become a net zero bank, supporting customers to thrive through transition, and unlocking next-generation climate solutions. ESG is well integrated into the portfolio management process of our discretionary solutions. We are increasing our investments to upgrade our ESG market database, client reporting platform and frontline education to enhance our sustainable investment capability. Under the 2021 Top Trend of Investing for a Sustainable Future, we recommend robust ESG solutions to capture opportunities from climate change mitigation and adaptation, and China’s green revolution.

August Hatecke, UBS Global Wealth Management

We have seen strong continuous inflows in sustainable investing strategies globally amid COVID-19. We believe the trend will continue as investors think about how to position their portfolios after COVID-19 and ahead of green-focused recovery spending and regulatory initiatives.

In September 2020, we announced that we have made sustainable investments the preferred solution for our wealth management clients globally.

We manage half a trillion (US$488 billion) in core sustainable assets across the Group.

In WM APAC, the number of clients investing in our fully diversified sustainable portfolio and fund increased by 50% in 2020.

The 100% sustainable cross-asset portfolio continues to be our star offering as UBS is the first wealth manager to offer such kind of portfolio for private clients. It has grown from zero interest to having a share of close to 20% of all mandates in APAC, with APAC AuM sitting above US$1.6 billion today.

UBS Advice Premium: It is the first personaled SI advisory offering in the industry that provides personal sustainability scores and advice based on what is important to each and every client. It covers >11,000 issuers, covering stocks, bonds and funds and it provides full transparency with sustainability reporting.

Research and insights: This year’s Future of… program will publish regular white papers on challenges that resonate strongly with clients and provide associated investment solutions across public and private markets. The first offering in the series, Future of Waste was launched on Feb 2020. The white paper and investment offering present opportunities to mitigate costs and issues associated with waste and target a compelling financial return.

UBS oncology Impact Fund. We raised US$470m for our UBS Oncology Impact Fund, an early stage private equity fund focusing on investments in the development of cancer therapeutics in order to achieve attractive financial returns, while making a positive global impact helping to extend and improve the lives cancer patients, focusing on curing certain forms of cancer. US$275m was committed by our investors here in APAC.

In February 2020, a record US$4 million donation split between the UBS Optimus Foundation and the American Association for Cancer Research was announced in support of innovative research that will accelerate breakthroughs against cancer and to support emerging market access to cancer care. This follows on the back of an earlier donation in April 2018, when the American Association for Cancer Research (AACR) and the UBS Optimus Foundations received US$1.2 million each.

KKR Global Impact Fund launched In September 2019 raised US$225 million from the private clients for the KKR Global Impact Fund as part of a five-year plan to mobilise private wealth for public good. Today, it has so far raised over US$1 billion – very few impact funds have surpassed the US$1 billion mark.

Wang Ya, Private Banking Centre of Bank of China

In order to provide a better asset allocation service, Bank of China has built a comprehensive and systematic investment strategy system, in which the annual asset allocation report sets the tone for SAA investment for the subsequent year, while the quarterly/weekly/daily reports focus on mid-term tactical asset allocation, and short-term trading suggestions.