Judy Hsu, CEO, Wealth & Retail Banking at Standard Chartered Bank, said the trend is not limited to recent market gains and has been building over the past two decades.
She also highlighted increasing sophistication among Asian investors, with diversification and long-term wealth planning becoming more important.
Hsu remains constructive on India’s long-term market opportunity, citing strong underlying economic growth, entrepreneurship and M&A activity.
For India, Hsu sees opportunities in GIFT City as the platform develops as a route for NRIs to access Indian financial markets and for resident Indians to diversify their wealth overseas.
She said Indian high-net-worth clients are showing greater interest in private markets, including private equity and private credit, while also looking at a wider range of investment products such as fixed income and structured products.
She also sees continued interest in the technology and AI theme, while stressing the importance of diversification, asset allocation and investors’ ability to withstand volatility when building long-term portfolios.
This is an edited transcript of the interview.
Q: Wealth management as an industry in Asia has suddenly seen a huge upsurge in the last one decade. Let us understand this upsurge of wealth. Have you seen a big rise in the clientele from Asia, especially from North Asia, simply because wealth seems to have jumped?
A: This is a structural trend that obviously in the last couple of years after COVID, we have seen, on the back of this technology super cycle, a number of markets have done well. But I would say that in terms of the rise in the middle class and the rise in the affluent market, it is a structural trend that we’re seeing for the last 20 years or longer. There will be ups and downs. Clearly, when markets do really well, and we have seen some of the numbers that you have shared, this creates more wealth. There are years when markets take a correction, and we have seen a couple of those crises, where obviously there is some wealth effect.
Q: Did the last one or two years see an increase in the number of wealthy people?
A: I think for sure, after the pandemic, as people came out of the pandemic, and on the back of, as I said, this technology supercycle, the AI big structural investment has created a rise in wealth, and all the markets have been doing well. And for whoever has invested their savings into that market, they have benefited. In India, we have also seen since the COVID crisis, the financialisation of consumer savings, with people putting more money to work. All this, I think, has created long-term wealth accumulation.
Q: Before I come to Indians, let me come to India’s GIFT City. India is trying to compete for this global wealth audience. What’s your sense? Is GIFT City getting there as a competitor to maybe Singapore, first, we wanted to compete with Mauritius, and then with Singapore. Do you think it’s getting there?
A: We have been one of the first banks to set up in GIFT City, mainly for our institutional clients, and that has gone very well. For the wealth and retail business, we are also now offering wealth products mainly for the NRIs who want to access and participate in the financial markets in India. They can come directly into the domestic market or go through GIFT City. I see the opportunity for sure for the NRIs to leverage that platform to invest into India.
I also see that as an opportunity for residents of India, if they would like to diversify some of their wealth within the quota they are able to use to invest overseas, as an opportunity to diversify as well. I see that’s a great platform, and it’s a very long-term plan by policymakers in India, and I see that as a fabulous platform.
Q: Now let me come to your Indian clientele. Have you seen an upsurge? As you said, financialisation has picked up post-COVID. Do you see an increase in the number of wealth clients, and is there a change in the way they are approaching? Do they have more stomach for, say, private equity? What are the trends you see among the rich?
A: Among the rich, definitely in India, we have seen, over the last many years, the rise of the middle class and entrepreneurship. That’s created a lot of wealth. In the early days, when people acquire wealth, they put it into savings, they put it into insurance, and now when they have more wealth, they go a bit more long term because that money they don’t need to use tomorrow. To invest in the equity market, you have to have a long-term view. You don’t want to get out when markets are down, so that has been a fabulous trend in terms of participation in the equity market in India.
As for the high-net-worth and ultra-high-net-worth clients, we have for many years now seen interest in private market products, and now, since the pandemic, we are seeing even more shift into the private markets area, be it private credit, private equity, and that market has grown. Obviously, we’ve seen gold doing very well as well. That’s for everybody. So there’s more diversification, more options for investors, instead of just the public listed equity markets, there’s fixed income. There’s structured products that have also done very well. If you want to invest in the underlying asset, but you want some protection, you can also do a structured product with a derivative and participate.
So I think that there’s no shortage of innovation in terms of where you can invest. Ultimately, it really comes down to investors’ investment time frame and their risk appetite, and that is how I think a bank like ourselves, with our global experience and long-term expertise, can really support the market.
Q: I am asking you precisely because even in India, we first go through the mutual funds, but now we have seen a burst of alternative investment funds, which clearly are taking you outside the public market. But are you seeing a lot of Indians coming to your GIFT City, or even to your local offices, asking for investments abroad? For the last 24 to 26 months, the stock markets have not been doing that well, and global markets have been doing exceptionally well. So, are you seeing an increased appetite from your Indian HNI clients to invest outside?
A: We have always seen some interest, as a hedge to have some of that wealth diversified overseas. We’ve already seen that, clearly, in the last couple of years, there’s a bit more interest. When markets are doing well here, there’s more capital going into markets locally. There’s more diversification, but I would say that that is sometimes less to do with the market performance, but more to do with the sophistication.
One big trend that we have observed, and I have been in the industry for many years, is that Asian investors, including our clients here in India, are just becoming more sophisticated and thinking about resilience and diversification. It’s not just about wanting 10% return tomorrow or next six months. We’re building that resilience because the world is also getting quite uncertain. So this global diversification, building resilience, is a super important part of their long-term wealth planning.
And the other thing that we’re seeing a lot of interest in among our high-net-worth clients is thinking about wealth planning, thinking about the next generation, how do I pass my wealth? It’s less about how I can earn, say, five or 10 or 20%, and more about how do I support my children as they assume the business that I’ve built or the wealth that I’ve built. So, yes, there is a lot of financial education there.
Q: The other question I had is, how popular is cryptocurrency? It came with a bang, and then we saw it not doing too well. Now again, Bitcoin is reaching out to 52-week highs and even higher. What’s the sense? Is it becoming a popular investment product in Asia?
A: I think it was very popular, and then we had the crypto winter, and then it came back. So this asset class is here to stay. There are a lot of derivatives like ETFs that obviously enable people to participate through ETFs rather than buying directly. I do think this asset class is here to stay, but you have to have the stomach for the volatility, it is still quite volatile. It can go up and down, and if you don’t have that sort of stomach for that volatility, maybe there are other asset classes that are more suitable.
We’ve seen a lot of interest by Asian clients, the high net worth, also by young investors. You know, more young investors own crypto than they have a savings account, and I always tell the younger investors, I mean, I guess they have time on their side, but be ready for the volatility. But I do think this asset class is here to stay.
Q: Well, speaking of asset classes, my viewership, my audience will want to know from an experienced person like you what is the most attractive investment opportunity now. And in their head, their questions would be: Should we go to gold? Because gold was so popular exactly, you know, one year ago, and then we saw the movement away, and secondly, whether the AI movement or AI popularity is going to continue.
A: Well, gold has done really, really well. Now it’s sort of taking a bit of a break, but we remain quite constructive on the long-term trend of gold. AI, this is, like I said, a technology supercycle, and a lot of capital is going in there. We’re seeing AI products, Those shares have also done very, very well. So, I do think that everyone should think about having some allocation into this sector.
But at the end of the day, that’s why I’m called a wealth manager. We are here to support clients in building a longer-term portfolio and asset allocation. Certainly, most of our clients have a small part of their asset allocation into more short-term, more tactical plays, and this is where we continue to be quite bullish on the technology supercycle. But it will have volatility, and you have to look for opportunities to enter and you have to obviously just have some stomach for some of that volatility. But it is quite a concentrated sector and one which will have some volatility that people need to be prepared for.
Q: Well, I know I’m being a little unfair to ask you this question, but that’s what will be on the mind of our investors. India has lost out because it does not have a good set of AI stocks. It’s just some startups who are now coming into the picture. Do you think that the mood towards India looks like turning anytime soon? It’s quite clearly still the Kospi, Taiwan and China in Asia, which seems to be attracting the bulk of the wealth. Do you see that changing any time now?
A: I think the underlying growth in India is still very strong. Very few economies grow at that 7-8% rate. It may not be that right now. A lot of capital is being attracted to AI-related stocks, and you talk about Kospi and Taiwan, but these are cycles. And India, as long as the underlying economy is growing, and I have been here for the last couple of days speaking to our clients, there’s a lot of entrepreneurship, a lot of M&A going on.
This may not be the focus of that particular cycle, but definitely, the various sectors are doing very, very well, and we remain very constructive on the long-term opportunity of this market, and people should absolutely allocate into this market in India.
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