Q&As with Lombard Odier’s Ecosystem¹ of Strategic Alliances

Global geopolitical tensions are on the rise, with Russia's recent mobilisation on the back of the ongoing Ukraine war, the escalating US-China conflict, and the energy crisis in Europe all expected to weigh on security in Asia-Pacific. These tensions, together with increasing inflation and supply chain disruptions, are causing rapid shifts in global financial markets.

In this complex and ever-changing environment, managing portfolio risk is amongst investors' top concerns. As outlined in Lombard Odier's latest study on Asia-Pacific's wealthy population, over the past two years investors have decreased exposure to domestic markets in order to manage the uncertainty caused by COVID-19. Many have kept a keen focus on opportunities outside of their local market – we also observed that the crisis prompted some investors to consider relocating. Portfolio diversification is of major concern, amidst fears of low returns and of missing out on investment opportunities.

In this context, we hear from our Ecosystem of Strategic Alliances regarding their insights on the topic of portfolio diversification, and how they are helping clients who are seeking to diversify beyond their local markets.

Portfolio allocation beyond local markets

In Thailand, the majority of clients and high-net-worth (HNW) investors are owners of businesses based onshore in Thailand. That said, according to Jirawat Supornpaibul, Executive Chairman, Private Banking Group, Kasikornbank, there has been interest from clients looking to diversify their funds overseas, particularly during the pandemic. When it comes to property, these investors buy overseas both for investment diversification and for temporary use, such as when their children go to school abroad, Jirawat explained.

“For clients who are keen to diversify their portfolio and access a more global offering, the bank works with global partners or financial institutions to make them locally available through funds and structured products, or helps clients access such offerings through these partners or financial institutions," he added.

In Taiwan, results from our latest HNW study show that less than one third of Taiwanese investors have more than 40% domestic exposure in their portfolios. This shows that the majority of Taiwanese investors are diversifying beyond their local market. A bank's ability to deliver a global offering locally plays an important role for investors.

According to Taipei Fubon Bank, Taiwanese investors can choose from a broad range of products such as mutual funds, structured products, investment-linked insurance policies, overseas equities, and bonds, in order to meet their diversified investment objectives. The Fubon Group has also established a wide-ranging international network, with customers in Taiwan, Hong Kong, Singapore, Vietnam, Indonesia and Australia all having access to localised financial services.

For Taipei Fubon Bank, the Strategic Alliance with Lombard Odier, in place since 2018, has enabled the bank to draw on Lombard Odier's more than 225 years of private banking experience to customise diversified client solutions and gain access to more global offerings.

Similarly, in the Philippines, Arlene Joan T. Agustin, Senior Vice-President, Private Banking Group Head, UnionBank of the Philippines, noted that UnionBank Private Banking adopts an open-architecture structure and offers its clients the best-in-class local and global investment offerings.

“Through our Strategic Alliance with Lombard Odier, and partnerships with global trading platforms, we are able to make global funds available to our clients, through a local touchpoint or relationship manager," she said.

Lombard Odier and its Strategic Alliances discussed how to build resilience in an age of uncertainty. Read to find out more.

Relocation and global opportunities

Relocation overseas will bring challenges for private banks, such as the greater need for cross-border and geography-specific investment structures. On the flipside, there will be greater opportunities for banks that invest in digitisation, including digital transactions and communication channels, and opportunities to offer unique relocation and migration avenues.

In light of this, Arlene remarked, “We believe the future of business is in being able to digitise its proposition, operations, products and services, and platforms. Digitisation will enable businesses to efficiently and sustainably grow and expand to take advantage of new opportunities."

For Japanese Ultra High-Net-Worth investors, relocation presents challenges such as additional tax burdens, which must be navigated while assessing future potential long-term gains.

Yuichi Kagawa, Head of Wealth Management, Mizuho Securities (Singapore) said, “As a global bank, Mizuho group would like to serve the needs of clients who are considering a relocation abroad, or who would rather remain in Japan but would like to increase the global exposure of their portfolios."

According to the 2022 HNW Study, Japan HNW investors have led the shift towards overseas investment, with 58% reducing their portfolio's domestic exposure, thus lessening their reliance on the domestic economic landscape. “In this sense, we are in a better position to be able to offer global investment offerings to our clients, together with our strategic alliance with Lombard Odier in Singapore," Yuichi Kagawa said.

Discover more about maintaining portfolio resilience amidst volatility

Local access to global offerings

At Lombard Odier, our Ecosystem of Strategic Allianceswith well-reputed financial institutions in Asia-Pacific allows investors in one local market to find opportunities in other markets. We are seeing an increase in demand for local access to global offerings such as tailored wealth management and family office services.

Vincent Magnenat, Limited Partner, Asia Regional Head and Global Head of Strategic Alliances, Lombard Odier said, “The key for banks to retain geographically-mobile clients is to have a value proposition which is compatible with clients' multi-jurisdictional set-up. At Lombard Odier, our strength lies in our Strategic Alliance proposition, which potentially allows investors in one local market to find opportunities in other markets with our support and access to global expertise and offerings."

Find out about Lombard Odier's commitment to clients in Asia

¹ A unique model in Asia, Lombard Odier’s Strategic Alliance Ecosystem brings the bank’s investment and family services expertise together with that of the leading local financial institutions in the region to holistically serve the wealth management requirements of entrepreneurs and families. Clients are offered a tailored level of excellence to satisfy both their local and international private banking and investment needs.