Thu, Sep 12, 2019 – 5:50 AM
THE ongoing US-China trade war and the murky economic outlook appear to be keeping Asia’s rich awake at night – at least, more so than their peers in the West.
More than half of Asia’s high net worth individuals (HNWIs) – about 56 per cent – view the global economic uncertainty as one of their leading concerns, compared with 41 per cent of their Western counterparts, according to a new study from Royal Bank of Canada (RBC) Wealth Management.
Similarly, 39 per cent of Asian respondents flagged “cross border trade/tariffs” as a key concern, whereas only 27 per cent of Western HNWIs concur.
HNWIs are described as those with at least US$1 million in investable assets. The research compared the Asian economies of China, Taiwan, Hong Kong and Singapore with the Western markets of the UK, US and Canada.
“This likely reflects the fact that Asian HNWIs – particularly those among Asia’s global families – often have relatively high exposure to international markets because of children attending school overseas, international property holdings or overseas investments,” said Vivian Kiang, Head of Wealth Planning, RBC Wealth Management – Asia.
The survey also found that the investment goals and attitudes of Asian HNWIs were also quite different from the other Western markets.
More than 61 per cent of Asian respondents agree that their investment goal is “to increase wealth”, while only 45 per cent of Western HNWI respondents aim to do so.
Asian HNWIs are also more hands-on with their money; in Asia, 39 per cent of HNWIs classify themselves as “active investors” versus 29 per cent in the West, where passive investing is more deeply entrenched.
This comes as fortunes in Asia are often younger than those in the West, with many families still in the process of building their wealth, RBC noted.
But even as Asians strive to grow their money, they are also increasingly focused on doing good.
Almost three-quarters of all Asian HNWIs, or 72 per cent, said that it is important to consider environmental, social and governance (ESG) factors when investing – much higher compared with their Western peers. Only about 43 per cent of Western HNWIs say the same.
Michael Reed, head of Wealth Management, Southeast Asia and chief executive, RBC Singapore Branch, explained that this divergence is attributed to a changing of the guard in Asia.
“In my experience, younger members of Asia’s global families, which are internationally-mobile HNW families with financial interests that cross national borders, have been educated overseas and are returning to Asia with new ideas about how to manage family wealth,” he said.
“They increasingly see their investment activity as an extension of their ethical values, leading them to favour ESG factors.”
This is not to say that Western HNWIs do not favour ESG investments – quite the opposite.
Socially responsible investing (SRI) came about in the 1980s in Europe and then spread to the other Western markets, which later evolved into what is now considered more mainstream practices.
“In Asia, however, ESG is a relatively newer concept, leading many of the clients I speak to in these markets being more likely to identify it as an active factor in making investment decisions rather than ‘standard operating procedure’,” said Mr Reed.
About 2094 individuals were surveyed between May-June 2019, including 440 respondents from China, Hong Kong, Singapore and Taiwan. The survey included HNWIs, their adult children and those who are not yet HNWIs but who have a minimum income of US$100,000.