Standard Chartered has advised more than 2.5 million of its affluent clients to diversify their portfolios and stick to core investment principles as fresh capital pours into bullish markets.
A risk-on mentality over the summer benefited some wealthy clients, but market corrections could lie ahead, said Judy Hsu, the bank’s CEO of wealth and retail banking, in an interview last week.
“In July and August, we [saw] more clients across the board deploying more cash into investment products and they are looking to put more of that deposit into the market,” said Hsu, who in October relocated to Hong Kong, the bank’s most profitable market.
Market sentiment stabilised after the US and China unveiled a 90-day tariff truce, reversing what had been a prevailing mood of caution since April, she said.
“The key here is really diversification,” Hsu said. “From our advisory perspective, we always go in with a portfolio approach.”
Hsu observed that clients invested in fixed-income assets expected interest rates to eventually decrease. On equities, while some allocations were shifted into Asia – specifically Hong Kong and mainland China – there was “still a lot of interest” in the US because of its strong technology sector, she said.
So far this year, Hong Kong’s Hang Seng Index was 26.7 per cent higher, while mainland China’s CSI300 Index rose 13.4 per cent. In the US, the Nasdaq and the S&P 500 reached record highs after rising by more than 10 per cent, according to Bloomberg data.
“When markets are running, we go back to the principles – are you investing in good companies, is this in line with your investment profile, is your asset allocation in line with the volatility?” Hsu said. “There could be another correction. These things happen.”
Most Asian investors tended to avoid taking on too much leverage, Hsu said, as evidenced by the fact that Chinese households generally hold a record level of savings.
“I would say that animal spirit is not fully back on [because the] general sense of the world is there are uncertainties,” she said.
Standard Chartered has said its wealth business is its growth engine. The bank’s second-quarter fee and other non-interest income rose 31 per cent from a year earlier to US$2.8 million, driven by the launch of new products and the addition of wealthy clients.
In the first half of this year, it booked 135,000 new affluent clients, while 157,000 existing affluent clients moved up the ladder by putting more assets under the bank’s management. These numbers were in line with the annual averages that Standard Chartered sees each year, with a goal to grow the affluent client base by around 10 per cent.
The bank focused on enhancing its digitalisation to offer tailored analytics to clients and hiring, Hsu said.
“My guidance to all the market is – hire every day when you see talent,” she said. “We’re always looking for talent, and in fact, that is why we’ve been growing so well in the last few years in the private bank.”
Standard Chartered CEO Bill Winters unveiled a plan earlier this year to invest US$1.5 billion in the bank’s wealth-management business over the next five years. Half of that funding will go towards recruitment, with around 25 per cent of new hires and 25 per cent for digital platforms.
Meanwhile, on digital assets, which have gained momentum on rising prices and regulatory clarity in markets like the US and Hong Kong, high-net-worth clients have expressed enthusiasm, Hsu said.
“We’re seeing more interest as a hedge to the US dollar and as part of a diversification of their portfolios,” she said. “But it is volatile.”
Source: South China Morning Post
