Delivering Wealth Solutions Amid A Volatile Landscape

With the outlook for the global economy highly uncertain due to the Russia-Ukraine war, supply disruptions and rising inflation, high net worth individuals in Asia and the rest of the world are bracing themselves for a sustained period of heightened market volatility. Against this backdrop, HSBC Global Private Banking aims to help its clients manage these risks by leveraging their international connectivity and comprehensive capabilities to pursue investment opportunities and diversification.

“With the ongoing uncertainty, whether it’s the inflation threat, more aggressive Fed rate hikes, or the Russia-Ukraine war, global diversification and risk management become extremely important for our investors. HSBC Global Private Banking aims to help our clients diversify their portfolios across assets and geographies in the most optimal way possible,” says Abhishek Mehrotra, Managing Director and Senior Desk Head, Philippines and Japan at HSBC Global Private Banking.

This strategy of diversification sits well with high net worth and ultra-high net worth clients in the Philippines, who have traditionally been firm believers in such an approach, not just when it comes to investing, but in their personal and professional lives.

“Clients in the Philippines tend to have footprints in multiple locations to capture the strengths that each place has to offer. And this is where HSBC’s international connectivity and universal bank model can benefit them, as we are comprehensively covering both the East and the West,” says Siew Meng Tan, Regional Head of HSBC Global Private Banking, Asia Pacific.

“We are present in the key financial centers globally, in Hong Kong, Singapore, London, Switzerland and the US, enabling us to support our clients as they expand their businesses, and as their families look towards living in different parts of the world. Many successful Filipinos send their children overseas for education, or to invest in real estate abroad, and the US is one of their favorite markets,” she adds. “We have a dedicated Asia coverage team based in the US, which is comprised of relationship managers, investment counsellors, credit advisors and wealth planners with extensive experience relevant to clients from the US-Philippines corridor, and who have great interest in international mortgages and geographical diversification.”

Meeting Changing and More Sophisticated Wealth Needs

Siew Meng Tan, Regional Head of HSBC Global Private Banking, Asia Pacific

The needs of Asian ultra-high net worth families are likely to evolve over time, with much of the wealth accumulated by entrepreneurs who built, and continue to run, successful businesses.

“We have supported many of these entrepreneurial families through the years, developing an intimate understanding of their needs across businesses, private wealth, and even generations. This is especially true in the Philippines, where HSBC first established an office in 1875 offering financial services to communities of exporters and merchants,” explains Mehrotra.

Today, HSBC Global Private Banking clients in the Philippines can tap on the full capabilities of the entire group—from personal transaction banking services to commercial banking services—to meet their ever-changing needs at every stage of the clients’ wealth journey. In particular, there is a growing demand for solutions that can help ultra-high net worth families manage a seamless transfer of wealth to the next generation.

“Wealth preservation is a key priority for our Philippines clients, and HSBC has been very instrumental in inter-generational wealth transfer for ultra-high net worth families in the country. HSBC Trustee, which has been around for over 75 years in Asia, is very well versed with managing family dynamics, and well placed to support our clients in succession planning and transferring wealth to the next generation,” says Mehrotra. “We can help our clients find solutions to a broad range of wealth planning needs including family governance and family business succession and working with next generations. Philippines clients have a strong sense of community and believe in giving back to the society in various ways. We can help secure a wider legacy and make a positive change regardless of where our clients are on their philanthropic journey.”

Engaging through Digital

As private banking clients become more comfortable utilizing technology for their wealth needs, HSBC is engaging them through multiple digital channels. These include mobile apps that enable remote transactions, or through secured communication platforms via WhatsApp and WeChat.

Reflecting the bank’s commitment to digitalization, HSBC Global Private Banking is investing more than US$100 million in Asia over a two-year period to build and innovate its core banking and digital platforms.

“This investment is very timely, and we accelerated it over the last 12 to 18 months as engaging with our clients through digital channels became critical due to Covid-19 lockdowns in countries such as the Philippines,” says Tan.

“When we launched our chat applications on secure platforms such as WhatsApp and WeChat, one of the first clients to adopt this solution was a key Philippines client,” she recalls.

Investing in the Future

As the next generation of Philippines clients come to the fore, there has been an increasing adoption of investment trends related to the New Economy, ESG (Environmental, Social and Governance), and alternative investments.

Abhishek Mehrotra, Managing Director and Senior Desk Head, Philippines and Japan, HSBC Global Private Banking

In the area of sustainability, HSBC is keeping pace with its clients by committing to provide between US$750 billion and US$1 trillion of sustainable financing and investments over the next 10 years to support the net zero transition.

In recent years, there has also been growing interest in private assets and alternative investments, as high net worth investors in the Philippines seek to reduce volatility and improve yields in their portfolios. With its global expertise in alternatives, HSBC is well-positioned to serve investors in this emerging space. In 2021, trade publication Asian Private Banker named HSBC Global Private Banking as the “Best Private Bank for Alternative Advisory” for the third consecutive year.

HSBC’s success is also being recognized in other aspects of the private banking world. Among the seven awards HSBC Global Private Banking received from Asian Private Banker last year were the “Best Private Bank for Wealth Planning Services” and blue-ribbon “Best Private Bank in Asia Pacific”; accolades that reflect the progress it has made in delivering industry-leading client offerings and services.

These awards reflect HSBC Global Private Banking’s ongoing mission to support its high net worth and ultra-high net worth clients in the Philippines and the rest of Asia as they seek to navigate a highly volatile landscape, while looking to capture opportunities that may emerge.

“The challenges we are witnessing come with their fair share of opportunities, and many of our Philippines clients are actively looking towards HSBC to help them navigate through these times and tap those opportunities,” says Mehrotra.

privatebanking.hsbc.com


Disclaimer

The information contained in this article has not been reviewed in the light of your individual circumstances and is for information purposes only. It does not purport to provide legal, taxation or other advice and should not be taken as such. No client or other reader should act or refrain from acting on the basis of the content of this article without seeking specific professional advice. Issued by The Hongkong and Shanghai Banking Corporation Limited.

Celebrating The 25th Anniversary Of The Hong Kong Special Administrative Region

This year marks the 25th anniversary of the establishment of the Hong Kong Special Administrative Region (HKSAR) of the People’s Republic of China. Our anniversary theme “A New Era — Stability • Prosperity • Opportunity” echoes the spirit of Hong Kong’s achievements over the past quarter of a century and looks forward to the bright prospects ahead.

Since the establishment of the HKSAR in 1997, both the Chinese Central Government and HKSAR Government have remained true to the original aspiration for our city under the principle of “One Country, Two Systems”. As such, Hong Kong enjoys the dual advantages of closer integration with the Mainland while maintaining its global outlook and capitalist way of life.

This has enabled Hong Kong to cement its position as an international financial center and a conduit for flows of capital, investment and trade between China and the rest of the world. With abundant business opportunities and a fascinating cultural blend of East and West, the city is home to a multicultural community.

Turning Challenges into Opportunities

The past 25 years have not been all plain sailing. Hong Kong has faced various challenges, including the Asian financial crisis (1997), global financial crisis (2008) and the SARS outbreak (2003), but has always turned crises into opportunities and emerged stronger. The past three years have been particularly tough—our society and our economy were shaken by social unrest in 2019. Our economy has also been severely affected by the Covid-19 pandemic, which spared no one.

As our economy gradually recovers from the impact of the pandemic, and with stability restored, Hong Kong is looking ahead to a bright new era. It is the only city in the world that offers a secure and dynamic environment for business, an exciting, cosmopolitan lifestyle and direct access to the Mainland market.

Back on Track under “One Country, Two Systems”

Stability has always been the keystone for Hong Kong’s development as a safe, secure and resilient place. Implementation of the Hong Kong National Security Law (NSL) in 2020 and improvements to our electoral system in 2021 provide the necessary legal framework and mechanisms for the HKSAR to safeguard national security, enhance governance and continue to thrive under “One Country, Two Systems”.

The Basic Law of Hong Kong and the Constitution of the People’s Republic of China form the constitutional basis of the HKSAR. The NSL stipulates that rights and freedoms shall be respected and protected as have been enjoyed by citizens under the Basic Law, the International Covenant on Civil and Political Rights, and the International Covenant on Economic, Social and Cultural Rights.

A New Era of Opportunities

Three-Runway System at Hong Kong International Airport.

As China embarks on a fresh phase of development, Hong Kong is entering a new era of opportunities with better integration into national development. The National 14th Five-Year Plan (the Plan) and the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) will herald huge opportunities for Hong Kong people and businesses.

Hong Kong will make full use of its unique characteristics to enhance our city’s competitive edges and embark upon a new and exciting chapter of the “Hong Kong Story”.

The Plan establishes a clear positioning and direction for Hong Kong’s economic development and supports Hong Kong in developing eight international centers in the areas of finance, transportation, trade, legal and dispute resolution services, aviation, innovation & technology (I&T), intellectual property trading as well as serving as an East-meets-West centre for international cultural exchange.

Gateway to the Greater Bay Area

As one of the most open and economically vibrant regions in China, the GBA offers many opportunities and has huge growth potential in various areas including I&T, advanced manufacturing, high-end services, trade and transport.

Being the most open and internationally-connected city in the GBA, Hong Kong will make full use of its advantages to become a world-class destination for people to live, work, invest, network and enjoy a high quality of life.

An Alluring Lifestyle

More than a stylish city, Hong Kong represents a lifestyle that’s immersed in cultural heritage, inspired by modernity and energized by an awesome natural environment.

In this city of contrasts, you will find big global brands and quaint corner shops, international fine dining and tasty local Cantonese cuisine as well as world-class exhibitions, entertainment and sports. Hong Kong’s sporting talent burst onto the international scene at the Tokyo Summer Olympics, where the Hong Kong, China Delegation collected a total of six medals, the best ever performance at an Olympics by Hong Kong athletes.

Just beyond the city limits and with easy access by public transport, a green oasis awaits locals and visitors alike, enticing hikers and water sports enthusiasts.

About 40% of Hong Kong’s land mass is designated as country parks and special areas, where people love to go hiking and camping all year round. A number of Marine Parks help to protect and conserve rich local marine resources.

Hong Kong is also known for hosting major arts, cultural and sports events, such as Art Basel Hong Kong, Art Central, Hong Kong International Film Festival, French May Arts Festival and Hong Kong Sevens (rugby).

Newly-opened Hong Kong Palace Museum.

The magnificent Hong Kong Palace Museum, featuring precious artefacts from Beijing’s Palace Museum, and M+, Asia’s first global museum of contemporary visual culture, are the latest grand additions to the West Kowloon Cultural District, which is the emerging centerpiece of the city’s arts and cultural development.

Promenades are unfolding in stages on each side of iconic Victoria Harbour, providing people with new and convenient locations to relax while taking in the splendid views of the city from sunrise to sunset.

A friendly cosmopolitan city, Hong Kong offers endless opportunities for people from around the globe to work, invest, study and enjoy a high quality of life. Our door is open to professionals, academics and entrepreneurs.

As we celebrate the 25th anniversary of the HKSAR, we welcome people from around the world to join us in working towards a bright and prosperous future.

http://www.hksar25.gov.hk

Heat Is On For Companies To Strengthen ESG Practices

Environmental, Social and Governance (ESG) investing, once considered a trend for millennials and younger investors, is fast gaining traction as a mainstream requirement for global corporations as the climate crisis intensifies. 

The historic 2015 Paris Agreement on climate change saw 195 countries and the European Union signing up to a common goal of keeping global temperatures from increasing more than 1.5 degrees Celsius to achieve climate neutrality by 2050, thereby ensuring that carbon emissions and removals offset each other.

The World Meteorological Organization, the foremost authority on global climate, says in its latest report that the odds for the world hitting the target of a yearly average of 1.5 degrees Celsius are 50-50. There is also the likelihood that the five years from 2022 to 2026 will be the hottest on record.

The good news is that an increasing number of organizations, from financial institutions and energy companies to real estate developers and leading manufacturers, are rallying behind governments to reduce carbon footprints and strengthen ESG efforts to achieve net zero targets.

Investors, both retail and institutional, are also aligning their portfolios to ensure that their money goes to responsible companies with clear ESG metrics—ranging from carbon footprint reduction, energy efficiency improvements, employee health and safety to product sustainability, the integrity of the company’s board of directors, and diversity and inclusion efforts across the organization.

One of the financial institutions guiding clients toward ESG investing is LGT Group, the world’s largest family-owned private banking and asset management group based in the microstate of Liechtenstein, a well-known economic powerhouse in Europe. The bank—owned by the Princely Family of Liechtenstein, who, as an entrepreneurial family, has transferred wealth across 26 generations for almost 900 years—provides wealth management services to private banking clients with sustainability as a core focus.

Another banking group, HSBC Global Private Banking, has research figures that indicate more than 82% of investors in mainland China, Hong Kong, Singapore and the United Kingdom rate sustainable, environmental and ethical issues as “quite” or “very important” to their investments. The bank is helping investors to future-proof their investment portfolios by choosing companies that are ESG-focused as they tend to deliver stronger earnings. With HSBC’s guidance, investors will also be able to invest while supporting the global movement towards a more sustainable and equitable future.

Product manufacturers, on the other hand, face different challenges as they need to utilize finite raw materials for production. But that is not stopping forward-thinking manufacturers from doing their bit to mitigate global warming.

Indonesia-based Asia Pacific Resources International Limited (APRIL Group), one of the largest pulp and paper producers in the world, has in place a one-for-one sustainability goal whereby every hectare of land used for commercial plantation is matched with an equal size of land set aside for conservation. At the company’s mills, 90% of the energy requirements come from renewable sources. APRIL Group also invests a dollar for every ton of fiber that is delivered to the mill, ensuring about US$100 million for conservation and restoration over the next 10 years. The company is leading by example to demonstrate that sustainability is not a zero-sum game and the pursuit of ESG goals need not be at the expense of profitability.

State-owned oil and gas companies are also rebranding themselves as “energy” companies as they transition towards carbon neutrality. One such company is Pertamina, Indonesia’s largest integrated energy company, whose biggest challenge today is energy security—or ensuring the uninterrupted supply of energy at an affordable price across an archipelago of more than 17,000 islands with a population of over 270 million. The company has rolled out several ESG programs and initiatives, such as developing an ecosystem that supports electric vehicles; introducing the use of biogas and waste materials in rural areas; recycling cooking oil; and promoting the conservation and restoration of the coastal and marine ecosystems. Pertamina is also building more solar power plants and harnessing renewable energy from hydro, geothermal and hydrogen as it journeys toward achieving net zero targets in line with the national agenda.

Meanwhile, in the real estate industry, Hong Kong-based Sino Group has signed on to support the United Nations Global Compact in 2020, as well as Business Ambition for 1.5°C and the Task Force on Climate-related Financial Disclosures in 2021, becoming one of the first real estate developers in Asia to commit to the global calls-to-action to contribute to a more sustainable future. The Group, having established its presence in Hong Kong for more than 50 years, is also setting targets to achieve net zero carbon by 2050. Guided by its “Creating Better Lifescapes” credo, Sino Group has introduced a wide range of eco-friendly and green initiatives to bring communities closer to nature.

Malaysia’s top corporations are also faring well in sustainability performance while transitioning towards carbon neutrality.

Top Glove, the world’s largest maker of gloves, headquartered in Malaysia, has not only set clear sustainability goals to achieve by FY2025, but it is also holding its management accountable with 40% of the team’s remunerations tied to ESG performance. Today, Top Glove has more sustainable products on offer, such as biodegradable nitrile gloves that can degrade at least 10 times faster than regular gloves, while their factories are increasingly shifting toward greater reliance on solar energy.

For Malaysia’s energy company, PETRONAS, the journey towards sustainability is via the circular economy model: by eliminating waste and pollution, circulating products and materials, and regenerating nature. Moving away gradually from activities that involve the consumption of finite resources, the global company, with a presence in more than 50 countries, is now providing renewable energy such as solar technology solutions and low-carbon fuels like natural gas as part of its energy offerings. In the past three years, PETRONAS has seen a threefold increase in demand for its clean energy and it will continue to scale up in this direction, possibly adding hydrogen as an alternative energy source.

Building Cutting Edge Wealth Management Solutions

Amid ongoing geopolitical tensions and market volatility, Asia’s wealth management sector continues to leverage on the region’s growing ranks of ultra-rich. Despite the headwinds brought on by the Covid-19 pandemic in the past two years, the Asia-Pacific will see the biggest growth in the number of ultra-high net worth (UHNW) and high net worth individuals between 2021 and 2026, according to the 2022 edition of Knight Frank’s The Wealth Report.

Over the next five years, Knight Frank forecasts that the global UHNW population will grow by a further 28%, led by Asia and Australasia (+33%), followed by North America (+28%) and Latin America (+26%).

The new generation of wealthy individuals will have different demands compared to their parents when it comes to managing money. For instance, many will likely communicate with their wealth managers through digital platforms, which will facilitate remote transactions seamlessly at their own convenience. At the same time, environmental, social and governance (ESG) concerns will also be a key priority in the portfolios of the younger generation seeking to make the world a better place.

To this end, financial institutions such as HSBC and Citigroup are showing their ultra-rich clients unambiguous commitments to achieve their sustainability ambitions. Both banks are targeting to achieve net zero emissions by 2030 for their operations, while helping corporate clients across various industries to transition to a low carbon economy.

As part of a global group with corporate, investment and retail banking capabilities across an international network, HSBC’s Global Private Bank has a wealth of knowledge and expertise at its disposal to support its clients’ sustainability journey.

For Citi Private Bank (CPB) and its clients, committing to sustainable investments is a perpetual priority. In the coming years, CPB will bring their best thinking, research, analytics and fresh actionable investment ideas to help clients meet both their financial and sustainability objectives.

Besides sustainability, wealth and family governance planning has become more important due to the unprecedented intergenerational transfer of wealth expected to happen across Asia in the next few years. Institutions such as Liechtenstein-based LGT could help many of the region’s successful businesses prepare to pass on the reins to their second and third generation members amid an uncertain economic environment.

Founded over 100 years ago, LGT has established an enviable track record for helping clients with their family governance planning by putting in place governance frameworks built around common values, business goals and investment principles. The bank was founded by the Princely House of Liechtenstein, a 900-year-old business-owning family that has passed on their values and wealth across 26 generations.

As the wealth landscape evolves at a rapid pace, private banks that embrace innovation, sustainability and the evolving needs of their clients will continue to be at the leading edge of wealth management for decades to come.