Amy Lo, co-head of Wealth Management Asia Pacific, head and CEO of UBS Hong Kong, and Group managing director at UBS shares his views with Asian Private Banker in ‘The Final Word’, a year in review by the region’s private banking leaders as they share their thoughts and opinions on key issues around industry trends, investments, regulations, and technology in 2021, as well as providing their predictions for 2022.
The last 12 months have been volatile for investors in China, from the meltdown in the high-yield bond sector to regulatory actions targeting sectors such as technology. How are you advising clients to invest in the world’s second-biggest economy in 2022?
We work with clients to unlock their needs and opportunities and provide advice on the big things that we should look at. We believe China looks poised to rebound in 2022 and see mid-teen percentage [growth] for MSCI China upside in the year ahead.
China’s GDP is likely to grow by around 5% in 2022, with a soft 1H22 and a strong 2H22. Policy easing could step up in view of the downward economic pressure.
With China pledging to achieve net-zero carbon emission by 2060, as well as emphasising green and low-carbon development in its 14th Five-Year Plan, we are seeing meaningful trends in the Greater China capital markets.
Structurally, our preferred themes are: global greentech, for which China and Japan are major players; Asia healthtech, especially telemedicine; 5G, where we see upside even after 2021’s strength; and the “ABCs of tech” (artificial intelligence, big data, cybersecurity), which we think will be one of the key tech themes in the years ahead.
The next big thing for this decade will be the “ABCs of technologies”. For example, we expect the market for AI services and hardware to grow 20% a year to reach US$90 billion by 2025 or even exceed our expectations. Meanwhile, big data is said now to be the new oil. We expect the global data universe to expand more than tenfold from 2020 to 2030. Finally, we expect the cybersecurity industry to grow by an average of 10% during 2020–25, thanks to steadily higher enterprise IT spending and the stronger adoption of cloud security.
Sustainability is higher up the agenda for investors than ever, with last year’s United Nations COP26 event underscoring the scale of effort needed to achieve global net zero emissions by the middle of this century. How are you helping your clients to remove ESG risk from their portfolios and embrace sustainability in their investment strategy?
Since the pandemic, there has been a transformational growth in clients’ mindset shift, asking advice on how we can help them achieve sustainable growth. When we meet with new institutional clients, it’s more often now than before that they want to know about our ESG approach.
We believe sustainable investments (SI) could shift the risk profile of clients’ investments and assets, but more importantly, we truly believe that finance has a catalytic role to play to help solve some of the biggest challenges in the world.
In a privileged position to lead and shape clients’ long-term investment strategies, we made SI the preferred solution for private clients globally in 2020, meaning when clients come to us we recommend SI over traditional solutions. We have also built a multi-billion 100% SI discretionary portfolio in APAC, with a strong growth in AuM since launch, indicating a rapid growth of appetite in APAC.
In addition, we have been supporting companies in the region in their climate strategies by issuing green and sustainable bonds worth more than US$23 billion in 2021, including Asia’s first ever sustainability-linked bond. We focus strongly on the engagement of portfolio managers with the companies they invest in, to actively influence the glide path towards a low-carbon economy, and to improve their performance on other S and G issues and opportunities.
How important is governments’ support to ensuring family office industry prospers in the region? What is at the top of your wish list for how governments in Hong Kong and Singapore can support the private wealth management industry’s development (e.g. less travel restrictions, more tax incentives, review/relax on a particular regulation)?
We are seeing a clear rise in the importance of family offices in Hong Kong and Singapore. According to the latest Hong Kong Private Wealth Management Report by PWMA, 73% of our survey respondents said that attracting more family offices to set up in the city will be an important area for growth in the PWM industry. Against this backdrop, the concerted efforts by governments and regulators in promoting Hong Kong and Singapore as the leading hubs for family offices in Asia are extremely important in creating a family office-friendly ecosystem to enable family offices to operate and thrive in the cities.
The UBS one bank approach allows family office clients to enjoy a full suite of services in a seamless manner. This approach has been a longstanding differentiator of the bank, demonstrating our enduring commitment to serving family offices within the APAC region and beyond. As such, we have formed the Family Office Competence Centre in Singapore and the UHNW and Family Office Solutions Group in Hong Kong to advise wealthy clients on the steps required to design and implement the most optimal family office structure to realise their visions.
For Hong Kong in particular, PWMA has been working closely with regulators. A more flexible regulatory regime, and enhanced investor protection measures would be beneficial to Hong Kong’s position as an attractive destination for FOs and boost investor confidence and trust in Hong Kong. On talent, we suggest introducing more tailored training programmes catering to the needs of family offices to be offered to practitioners and university students in preparation of serving these clients.
Meet 2021’s industry leaders in the full round up of of Asian Private Banker‘s The Final Word 2021.
