(Bloomberg) — Asia’s wealthy are readying cash to take advantage of opportunities in financial markets and private equity once the impact of the coronavirus pandemic subsides, according to the head of private banking at Southeast Asia’s largest lender.
Clients have increased cash holdings to about 40% of their portfolios in recent months, up from about 30% before the pandemic, Joseph Poon, who leads DBS Group Holdings Ltd.’s private bank, said in an interview this week. While the unit doesn’t disclose assets under management, it’s part of DBS’s S$251 billion ($184 billion) wider wealth platform, which is among the largest in Asia.
“Clients are holding a lot more cash than usual. It’s a very interesting phenomenon,” said Poon. “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. Some plan to use the cash for their own business needs and may use it to expand companies through partners, he said.
Poon’s insights mirror a wider trend. Leading private equity firms are sitting on about $1.6 trillion of dry powder, according to data compiled by Bloomberg, after the coronavirus halted private equity deals and roiled global markets. Still, holding onto cash may mean that some investors have already missed a massive market rally, with the MSCI AC Asia Pacific Index surging about 43% 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 U.S., Europe and elsewhere that see Singapore as “a strong jurisdiction,” he said.
The world’s rich are setting up family offices in greater numbers and plumping for Singapore as a base, the Monetary Authority of Singapore’s Deputy Director Spencer Hsu said in July. The city state has been trying to attract the secretive firms set up by the world’s richest clans in an effort to become Asia’s leading wealth management hub.
The private bank, which accepts clients with at least S$5 million in investable assets, is part of DBS’s wider wealth platform whose assets grew 7% at the end of June from a year earlier. DBS expects AUM to grow at a similar rate this year, Poon said.
Elsewhere in the region, DBS 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 currently 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.”
(Updates with details in seventh paragraph)
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