Breaking New Ground In The Chinese Wealth Market

With the expansion of its onshore private banking business in mainland China earlier this year, HSBC has made clear its commitment to one of the world’s largest and fastest-growing wealth markets. Combined with its well-established offshore business, HSBC Global Private Banking (GPB) is now able to seamlessly deliver the group’s comprehensive suite of solutions and access to its international network to the mainland’s high net worth (HNW) and ultra-high net worth (UHNW) families.

Jackie Mau, Head of Global Private Banking, HSBC China

The expansion in mainland China is integral to the bank’s bold ambition to be Asia’s leading wealth manager, says Siew Meng Tan, Regional Head of HSBC Global Private Banking, Asia Pacific. “Mainland China represents the largest and fastest growing wealth pool in the world. If we want to be Asia’s leading wealth manager, we need to be able to leverage this huge opportunity in front of us,” she says.

Research shows that by 2025, the total wealth of Chinese households is projected to grow by more than 50%, while the number of HNW individuals is also expected to rise to five million.

As the needs of Chinese HNW and UHNW individuals become more sophisticated, in particular those of the younger generation, they are seeking banks that can provide them with international and professional insights and expertise to meet their increasingly complex needs. By marrying expert local knowledge with global connectivity, HSBC is ideally suited to fill this gap.

“The internationally minded younger generation want the views and vision of international financial institutions like us to give them global perspectives,” explains Jackie Mau, Head of Global Private Banking, HSBC China.

Expanding Services to Meet Rapidly Growing New Demands

HSBC expanded its Chinese onshore private banking business in May this year, establishing dedicated teams in the Tier 1 cities of Beijing, Shanghai, Guangzhou and Shenzhen. It further extended its business to Chengdu and Hangzhou this October, making it the first international bank to set up a dedicated private banking service team in western China, while strengthening its service capabilities in the Yangtze River Delta region where successful entrepreneurs, especially in the dynamic digital and technology sectors, are creating new wealth and demand for wealth management is growing rapidly.

“Many of our Chinese clients are already banking with us offshore, but an average 80% of their wealth is onshore, so it was a very natural opportunity for us to support them with an onshore presence, and provide more professional and private banking services to help them manage their onshore wealth and family needs in China,” says Mau.

With an enhanced presence in mainland China, HSBC can now offer each of its private banking clients a dedicated Relationship Manager and Investment Counsellor who can help them achieve a more robust asset allocation, as well as create tailor-made solutions.

HSBC Global Private Banking also works closely with the group’s commercial bank and insurance arm in mainland China, as well as HSBC Qianhai Securities, to deliver solutions across the entire spectrum of financial needs. “We are the only foreign private bank with such an extensive footprint on the ground in China. At the same time, we are leveraging the entire HSBC ecosystem to offer holistic banking services to our clients,” Mau adds.

This support extends not just to clients’ personal wealth or business activities, but also to meeting their family needs. This can include helping clients with financial aspects of their children’s overseas education, whether applying for a credit card or opening a bank account in a foreign country.

As many HNW and UHNW Chinese adopt a more international outlook, HSBC’s truly global network—covering 64 markets and with Global Private Banking & Wealth serving 35 of these—is another major draw for mainland clients. “Chinese clients are looking beyond just Asia because of their international lifestyles, and therein lies the importance of the offshore and onshore strategy for us. The fact that we are already the largest international bank in mainland China puts us in a leading position to serve these clients,” says Tan.

Planning for Sustainable Futures

HSBC is tapping on its expertise in legacy and succession planning to support HNW and UHNW Chinese as they prepare for a significant wealth transfer to the next generation in the coming years. With over 75 years of experience working with families around the world, our HSBC Trustee offers global coverage with trust companies conveniently located in Hong Kong, Singapore, Delaware and New York in the US, and Jersey in the Channel Islands to help clients plan for their future and manage a smooth handover of their wealth.

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

“Clients want to work with a partner that they know is going to be around for many generations; someone they can trust to help them carry on their legacy for future generations,” says Tan. To this end, HSBC also conducts programmes for our next-generation UHNW clients to expand their horizons to become the future leaders.

Many among China’s wealthy are also keen to give back to society as part of their legacy. To support them, HSBC has established a series of events under its “HSBC GPB China Philanthropy Forum” initiative to share knowledge and connect like-minded families.

On its part, HSBC in mainland China has also demonstrated its commitment to give back to the communities it operates in. For instance, by the end of 2021, HSBC had made accumulated donations of nearly RMB1.3 billion (US$181 million) in mainland China, supporting rural revitalisation, financial education, environmental conservation, elderly care, child welfare, community development, innovation and entrepreneurship, as well as pandemic control and disaster relief.

Another fast-expanding sphere of interest among Chinese HNW and UHNW clients is sustainability, and in particular ESG investments. With many of its Chinese clients already investing in ESG through offshore wealth hubs such as Singapore and Hong Kong, HSBC is committed to enhancing its offerings in this space through continued innovation and product development in the coming years.

In 2022, HSBC has hired about 100 employees to support the rapid expansion of its Chinese onshore private banking business. Looking ahead, HSBC will further expand its onshore GPB team size three-fold in the next five years, with a focus on grooming local talent. The bank will also continue to invest in new products and digital platforms to enhance the level of service and solutions it can deliver to Chinese clients onshore.

“Many Chinese clients are now looking for professional partners who will guide them in an increasingly complex environment, and work alongside them to find the right solutions for their needs,” Tan notes. “As such, we will continue to invest in the talent and capabilities of our onshore business in China, with the objective of growing our share in this dynamic market.”

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.

A Bespoke Wealth Offering Trusted Globally By Single-Family Offices

In the face of an increasingly volatile environment, ultra-high net worth (UHNW) families in Asia and the rest of the world are seeking bespoke wealth solutions that can meet their increasingly complex and unique needs.

The answer for many has come in the form of single-family offices dedicated to managing the finances of established families. These entities have been estimated to manage more than US$6 trillion in funds, or more than the total handled by hedge funds globally.1

And, as Asia’s wealth creation story is still being written, such family offices—which typically cater to investors worth over US$100 million—are likely to gain even greater prominence. Experts argue that these entities offer the flexibility, balance sheets and long-term horizon to thrive even in a downturn.

Ulysses Lau, Managing Director, Head of Investments and Advice for Hong Kong and the Philippines at J.P. Morgan

“It’s hard for business owners or wealthy families to decipher everything that’s happening in the investment world on their own because it has become more uncertain partly due to a complicated global macro environment between inflation, currency volatility, energy supply and growth uncertainty. In the past these families would focus on equities and bonds, but as their understanding of long-term wealth management increases, many are starting to realize that they need to build a balanced portfolio with exposure to different asset classes to help them achieve their multi-generational financial goals,” says Ulysses Lau, Managing Director, Head of Investments and Advice for Hong Kong and the Philippines at J.P. Morgan.

“So, this shift in needs, coupled with the creation of new billionaires, has pushed up demand for single-family offices over the past few years.”

Meanwhile, with Asia preparing for a remarkable transfer of wealth to the next generation in the coming years, a younger set of investors are seeking more control over the way they manage their family fortunes; something a family office structure provides a platform for.

While family offices in some form have been around for centuries—indeed, J.P. Morgan has been an industry leader in serving the needs of ultra-high net worth families since its inception—today’s larger versions operate more like full-service global investment firms; trading not just traditional asset classes such as equities and fixed income, but also currencies, commodities as well as emerging asset classes such as digital assets.

Many also invest in real estate, private equity and venture capital funds, and even engage in their own private acquisitions and start-up deals. Such direct investments tend to provide family offices with better returns over the long run. It also gives business owners who have sold their enterprises a platform to lend their expertise to start-ups in an industry they are intimately familiar with.

“Single-family offices today are more sophisticated than ever before and tend to be a crossover private equity fund or a sovereign. Many have up to 100 to 150 financial experts, so they have institutional-level scale,” says Andrew L. Cohen, Executive Chairman of the Global Private Bank and a Global Chair of Investment Banking at J.P. Morgan.

Access to Institutional-Level Services

Global financial institutions such as J.P. Morgan have been helping their clients in the single-family office space for many decades by granting them access to the same level of service and expertise as their institutional clients.

“The needs of wealthy families today are very much institutional in nature, and they access all other lines of business within the J.P. Morgan franchise ranging from investment banking, corporate banking, asset management and risk management as well as custody and philanthropy services,” says Catherine Chin, Executive Director, Asia Head of Morgan Private Ventures at J.P. Morgan, who is responsible for providing institutional level access for the clients of J.P. Morgan.

The bank also facilitates the sharing of knowledge between its network of single-family offices around the world. “We are able to connect like-minded families and give them an avenue to share their thinking. This can range from sharing best practices for their family offices to exchanging thoughts on navigating volatile markets and the prospect of emerging risks given a backdrop of weaker global growth,” reveals Chin.

Catherine Chin, Executive Director, Asia Head of Morgan Private Ventures at J.P. Morgan

Aiding Philanthropic Commitment Amid Volatility

Having found success in the business world, more of Asia’s wealthy are now seeking to use their fortunes to make a positive social impact. J.P. Morgan leverages an endowment model of investing to help its single-family office clients meet their philanthropic commitments, regardless of how markets perform. An endowment model typically consists of a mix of traditional investments and alternative investments, such as hedge funds and private equity.

“For a traditional portfolio, it’s fine when there’s volatility in the markets because we look at it on a long-term basis. However, a family may have certain philanthropic commitments they need to fulfill every year, so we need to manage the portfolio differently so that it is able to generate enough returns to meet those commitments,” explains Lau.

To this end, J.P. Morgan’s Outsourced Chief Investment Office leverages expertise in endowment and alternative investments to help families to implement sophisticated one-of-a kind investment solutions designed to meet those goals.

A Bespoke, Global Partnership Model

Natacha Minniti, Managing Director and Head of 23 Wall for Asia, Europe & the Middle East, and Latin America at J.P. Morgan

J.P. Morgan’s commitment to single-family offices is best reflected in its establishment of a specialized offering known as 23 Wall; a reference to the bank’s original address on the corner of Wall Street and Broad Street in Lower Manhattan.

23 Wall is a specialized global team that provides the world’s largest and most sophisticated families with access to the firm’s overall intellectual capital, balance sheet, and deal flow around the world. The team engages with more than 700 families, representing over US$4.5 trillion in private family capital globally.

“At J.P. Morgan we’re constantly innovating and identifying solutions as well as leveraging intellectual capital across the firm that is valuable to families. Due to the size and sophistication of these families, we treat them as an institution. They have direct access to the investment bank (or another line of business) and 23 Wall acts as the connection between the two,” says Cohen.

23 Wall leverages J.P. Morgan’s comprehensive capabilities to ensure the power of the full J.P. Morgan Chase franchise is brought to bear for the benefit of the world’s largest families and their family offices.

“We understand that every client has different complexities and needs during different times of their wealth lifecycles. We have therefore built a team of global specialists with different capabilities and skills that are able to deliver seamless global coverage and facilitate access across every region to the relevant JPM experts,” says Natacha Minniti, Managing Director and Head of 23 Wall for Asia, Europe & the Middle East, and Latin America at J.P. Morgan.


CARRYING FORWARD THE BESPOKE BANKING LEGACY THROUGH A MODERN LENS

Andrew L. Cohen, Executive Chairman of the Global Private Bank and a Global Chair of Investment Banking at J.P. Morgan, talks about what makes the bank’s bespoke team, 23 Wall, relevant for today’s largest and most sophisticated families.

What was the motivation for setting up 23 Wall?
The name 23 Wall refers to the address of the original J.P. Morgan headquarters in New York. The name reflects the firm’s commitment to work with families today as we did originally—holistically across all lines of business as one firm and one responsibility to conduct “first-class business in a first-class way”.

Andrew L. Cohen, Executive Chairman of the Global Private Bank and a Global Chair of Investment Banking at J.P. Morgan

We wanted to embrace the legacy of J.P. Morgan himself and subsequent generations who have continued to innovate—bringing us to 23 Wall today. Essentially, we have taken that historical context and reconceptualized this for the pressing needs of today’s accomplished families. We want to deliver the entirety of J.P. Morgan to the right families matched by their sophistication and the size of their assets. This means that we will treat our subset of sophisticated clients like institutions in terms of capabilities, intellectual capital and offering.

What are some of 23 Wall’s unique capabilities?
The purpose of 23 Wall is to help families navigate the firm for their personal, family office, and operating business needs. The beauty of our coverage model is that we have an unrivaled global network. First, we have members of our team on the ground in 6 countries and 12 cities. Second, we have access to our partners across lines of business and finally we are able to facilitate knowledge sharing between our network of single-family offices around the world. All of this ensures seamless global coverage at every level.

Additionally, we are focused on technology and enhancing processes via digital enhancements for our clients. The digitalization of the business enables a more effective way of interpreting data into intelligence, which in turn helps to determine what is needed to map a path to the client’s goals. So, we’re using our technology platforms not just for trading and execution, but for data aggregation and figuring out how to intelligently match the client’s goals with sophisticated, diversified opportunities they can only access at J.P. Morgan’s 23 Wall.

Can you provide an example of how 23 Wall supports the aspirations of its clients?
23 Wall’s unmatched advantage is in helping clients simultaneously navigate our solutions and capabilities across lines of business as well as across regions, which is the value of having a truly global team. A more recent and relevant example was during the height of Covid-19, when a large European industrialist family approached us as they had a position in a NASDAQ-listed stock that was held via their holding company based in Singapore. Due to the nature of the complex structure, the family required a unique derivatives transaction executed in New York. The family was based in Europe, the holding company was based in Singapore, and the transaction was completed in New York—a fully cross regional effort, which the team was able to seamlessly complete. This scenario showcases the power of 23 Wall’s seamless, global coverage model and experience.

What is your outlook for the growth of 23 Wall’s business?
The types of families we get referred to are typically well diversified and have underlying operating businesses that are continuing to prosper. However, as the market environment continues to change and as intergenerational wealth transfer takes place in the next decade, our clients/families’ investment preferences and goals will inevitably evolve. 23 Wall will be there to prepare them for that change, and we see a robust pipeline of demand from the largest, global families over the long-term.


1 Secretive family offices manage $6 trillion globally, more than hedge funds.
Available at: https://www.cnbc.com/video/2022/07/11/secretive-family-offices-manage-6-trillion-globally-more-than-hedge-funds.html
Date as of: 11 July 2022.


Click here for more information

learn.more@jpmorgan.com

A Trusted Partner To Global Indians

The world’s largest migrant population, the 32 million members of the Indian diaspora, have grown in both affluence and influence around the globe. Despite their geographic diversity, global Indians have collectively become an important wealth market that share a need for sophisticated financial solutions.

To this end, HSBC—with an unparalleled global footprint and a comprehensive suite of financial services—is ideally suited to service the wealth-related needs of this group.

“HSBC is in a great position to serve ultra-high net worth (UHNW) global Indians because we are present in 63 countries and territories, more importantly, in all the markets that are of primary interest to this group of clients,” says Philip Kunz, Head of Global Private Banking, South Asia, HSBC.

“They are financially knowledgeable and tech savvy, and by virtue of many having studied or worked overseas, they are also extremely mobile and global in their way of thinking. As such, they have high expectations from the bankers who support them,” explains Kunz. “At HSBC, our relationship managers, as well as investment and product specialists, have access to both local and global expertise and solutions that cater to this very sophisticated group.”

HSBC Global Private Banking is also able to deliver the digital wealth tools and touchpoints that global Indian clients expect and it plans to invest around US$200 million over a four-year period to enhance its core banking and digital platforms in Asia.

Diverse Portfolios
Given their international perspective, UHNW Indians abroad seek out investments that span geographies and asset classes; from real estate in the U.S. to private equity in Southeast Asia.

According to research by HSBC, some 80% of global Indians—especially those in Hong Kong, Saudi Arabia, the UAE and the UK—are making investments in India. The study also found that 59% are planning to increase their levels of investment in India in the next three years, while the same proportion plan to increase investments in their country of residence.

While equities (47%) and property (46%) are the most common asset classes in their portfolios, a significant proportion are also investing in local businesses where they live, particularly in Australia, Hong Kong, the UAE and the UK.

Furthermore, global Indians are planning to make a range of sustainable investments in both India and their country of residence in the next two years. Many have also invested in private equity, especially in sectors such as technology.

The Singapore Connection
HSBC continues to scale up its capabilities in Singapore across wealth solutions and digital tools to better serve global Indians based in ASEAN, India and the UAE. Singapore and India enjoy enduring historical ties and relatively close geographic proximity, while financial links are also common. Indeed, almost nine in ten global Indians have investments in Singapore, according to HSBC.

“Studies have shown that around 23,000 millionaires have left India since 2014. In recent years, this group has started to gravitate towards Singapore because of the stable environment, strong rule of law and the government’s support of the financial services industry,” says Kunz.

The potential of the Indian diaspora prompted HSBC to be organised in a way where they can seamlessly support the wealth needs of their clients and their families as well as their businesses, regardless of where they are located.

Singapore is also a highly desirable family office locale for UHNW Indians given its sound financial regulations, strong rule of law, as well as political and economic stability.

Given the strategic importance of Singapore as an international wealth and business hub for ASEAN, HSBC has established a strong coverage team led by Anthony Hingley, Managing Director—Market Coordinator, Global India, MENA and Europe, to serve global Indian clients in this region. Based in Singapore, Hingley was appointed at the start of the year to help HSBC Global Private Banking marshal the resources of the group to meet their diverse needs.

“Anthony’s role is to ensure that we offer a cohesive and consistent delivery of our proposition and solutions to global Indian clients, regardless of where they are based, be it in Indonesia or Singapore,” says Kunz.

Philip Kunz, Head of Global Private Banking, South Asia, HSBC

Meeting a Spectrum of Needs
By tapping into HSBC’s breadth of expertise, HSBC Global Private Banking can satisfy the increasingly diverse and complex demands of the global Indian client. “Whether it’s opening an additional account or getting a credit card or supporting clients’ philanthropy and legacy planning needs, we can support them given our universal banking model,” says Kunz.

Indeed, HSBC has an established retail, commercial and investment banking presence in most of the markets where global Indians are based.

“Besides being able to respond to all the variances and needs that may arise, it is particularly important to our clients that they are dealing with a brand that they can trust, and HSBC has been in most of these markets for over 100 years,” explains Kunz.

Anthony Hingley, Managing Director—Market Coordinator, Global India, MENA and Europe, HSBC

He notes that legacy planning and philanthropy are two important aspects of the global Indians wealth journey. However, these topics can be complicated as many in the Indian diaspora are made up of large families spread across many countries.

To help clients navigate this complex landscape, HSBC can tap into its experienced trustee company, which celebrated its 75th anniversary in 2021. HSBC Trustee offers clients global coverage, with trust companies conveniently located in Hong Kong, Singapore, Jersey and in Delaware and New York.

HSBC Trustee has the experience and expertise to not only provide befitting solutions, but also to ensure wealth structures remain compliant amid constant regulatory changes across jurisdictions along with trusted advisors.

More global Indian families are also keen to incorporate ESG (Environmental, Social, and Governance) factors into their investment, philanthropy and legacy planning decisions, Kunz notes.

“Their investment portfolio is becoming greener, mostly driven by the younger generation, as they want to invest their family fortunes in sustainable companies and assets. Besides being able to tap into HSBC Asset Management, given we operate on an open architecture platform, our clients have access to the best-in-class sustainable investments available in the market,” he says.

The global Indian business is an increasingly important piece in HSBC’s broader ambition to be Asia’s leading wealth manager by significantly growing its assets under management. Says Kunz: “We have the ambition to become the leader in Asia by connecting our clients to global opportunities across the wealth continuum. Regardless of where they are, we can help them fulfill not just their financial ambitions, but also realise their dreams and aspirations.”

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.

Channeling Wealth To Public Service Fields And Injecting Financial Vitality Into The Real Economy

The Headquarter of ICBC Private Banking

The real economy, as the foundation of the new development paradigm of China, is charged with the mission and vision of developing the country through development of industries. “The real economy cannot grow without the support of finance. The Chinese private banking industry should give play to its resource endowment and capability advantages in its position as the ‘intersection’ of retail banking, corporate banking and investment banking businesses and the top of the whole retail finance ecosystem to deliver financial vitality to the real economy and serve the entrepreneur group and the real economy they represent,” said Li Baoquan, General Manager of the Private Banking Department of ICBC.

Empowering the real economy with comprehensive services. As main financial service providers to the real economy, commercial banks play a vital role. Upholding the business philosophy of “integrity and steadiness”, ICBC Private Banking has promoted the integrated development of “family business, enterprises and industries”. We joined hands with entrepreneurs, seized the opportunities of national policies and made best use of ICBC’s professional advantages to jointly build a bank-enterprise ecosystem with quality enterprises, supporting the transformation and upgrading of the Chinese economy.

Developing charitable trust to assist inheritance of family businesses. The nature of wealth management is to improve the efficiency of asset allocation and support and share the value from the growth of excellent enterprises. The biggest good about wealth management is that the wealth management service provider can help others achieve success while helping itself. The “Charitable Trust for Partners” from ICBC Private Banking always assists clients achieving inheritance of both material and spiritual wealth, channeling wealth to public service fields and thus promoting common prosperity.

Bringing services deep into communities. The demand for financial services is growing. Over 70% of ICBC’s private banking clients are private business owners. To provide more convenient and better services to clients, ICBC has set up “ICBC Sharing Station” on the basis of existing service centers for the convenience of people. ICBC Private Banking has upgraded the comprehensive services for entrepreneurs in all respects and built the “finance + pan-finance” service system.

Developing green finance to support ”carbon peak and carbon neutrality”. The financial sector shall channel more funds into green-related industries, advocate green production, and encourage green consumption. With a deep understanding of green finance policies and regulations, ICBC Private Banking has developed well-matched high-quality financial services for high-quality development, and continued to improve the quality and efficiency of green finance services, to support the achievement of “carbon peak and carbon neutrality” goals.

Taking coordinated actions to support enterprises amid the pandemic. Affected by the pandemic, enterprises are suffering from shortage of working capital, while banks are facing obstacles in operation at brick-and-mortar outlets. Banks are required to strengthen online services to meet every service need as far as possible. ICBC Private Banking has taken coordinated actions to ensure the operation of primary-level institutions and services and kept improving the quality and efficiency of financial services.

Looking back, ICBC always put clients in the first place and gave full play to its advantages as a large bank to support the development of the private sector. Through charitable trusts, ICBC contributed its bit to common prosperity. Looking forward, ICBC Private Banking will continue to create social value, fulfill social responsibilities and improve the level of financial services for the real economy. We will keep a foothold in the new development stage, integrate into the new development paradigm, build a corporate-private integrated service platform for entrepreneurs, and promote sustained and coordinated development of enterprises with the economy, society and environment.

 
 

 

 

 

Building Resilience And Forging Connections For Asia’s Wealthy

Asia continues to generate wealth at an impressive pace, even as headwinds continue to moderate economic growth. According to HSBC Global Research, wealth in Asia excluding Japan could outstrip the U.S. by 2025. The number of millionaires across Asia is projected to jump from roughly 30 million to over 76 million by 2030, with Singapore expected to overtake Australia’s millionaire population.

However, managing these expanding pools of wealth has become more complex due to a confluence of factors, from the effects of the pandemic and inflation to heightened geo-political tensions and recession risks.

In particular, fears over stagflation have adversely impacted both bond and equity markets in the first half of 2022. Rising consumer prices have forced central banks around the world to tighten monetary policy, resulting in challenging conditions for bonds. Equities, too, have been hit by concerns over a slowing economy and the threat of inflation denting the bottom line.

Annabel Spring, CEO, Global Private Banking and Wealth, HSBC

“This complexity impacts our clients, their current investments and long-term wealth goals, so we have been focused on providing the advice and services they need during these challenging times, both with respect to managing the risks and taking advantage of opportunities,” says Annabel Spring, CEO, Global Private Banking and Wealth, HSBC.

In light of these challenges, clients are currently focused on increasing the resilience of their portfolios, as well as managing their legacy and succession plans. A younger
generation of affluent investors is also demanding mobile convenience when it comes to managing their wealth, and incorporating environmental and social purpose into their investment decisions.

In terms of diversification, investors should seek out alternative assets such as private equity or credit, hedge funds and commodities to potentially reduce the overall risk in a portfolio, and to uncover uncorrelated opportunities.

Clients should also consider building multiple income sources, with cash flows that can reset higher in the event of rising inflation. Such income streams include infrastructure, private credit, real estate, floating rate bonds and dividend growers. Finally, investors should favor the stocks of high-quality companies that have the capacity to maintain profit margins even as costs rise.

“In an uncertain world, it is wise to build resilient portfolios to weather the likely bouts of volatility and not to ignore the wide range of opportunities,” explains Siew Meng Tan, Regional Head of Global Private Banking, Asia Pacific, HSBC.

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

“Our investment strategy specifically focuses on quality earnings, resilient income and multi-asset diversification to dampen market volatility and help clients to stay invested and capture opportunities. A focus on quality means selecting companies and areas with the most resilient fundamentals. Looking at income allows investors to take advantage of increased yields and helps mitigate market volatility. Lastly, diversification helps uncover opportunities in alternative assets.”

Sustainable investments are another way to build long-term resilience and capture future growth opportunities. On this front, the bank is able to deliver innovative ESG (environmental, social, and governance) solutions to its clients. These include, among many others, a biodiversity thematic discretionary mandate, sustainable core multi-asset solutions and private equity impact funds.

Leveraging a Global Footprint
Investors should not only pursue asset class diversification, but also geographical diversification, in an effort to reduce portfolio risk. With its global footprint, HSBC is well-positioned to offer international opportunities and capabilities that span numerous markets around the world.

“Our international network and connectivity across the Group are particularly valuable for our ultra-high net worth (UHNW) clients, whose complex needs and objectives are typically global in scope and span personal, family and business interests,” says Spring.

HSBC has a unique client servicing model, where a primary relationship manager leads the global coverage team of relationship managers across Global Private Banking (GPB) offices to look after clients’ global portfolio and needs. With the client’s consent, HSBC is then able to work closely with the client and their representatives globally.

“We onboarded a new client in Hong Kong recently who was impressed by our smooth introduction and onboarding process in the UK for his child, who is studying overseas, as well as our capabilities across different GPB offices to meet his asset diversification and wealth-planning needs to align with his family’s global lifestyle,” explains Tan.

As the needs of UHNW individuals extend to their families and businesses, HSBC’s universal banking model enables the private bank to provide their clients with access to capabilities in Insurance and Asset Management, Commercial Banking and Global Banking and Markets.

These capabilities are increasingly being delivered through a hybrid service model that combines advanced digital platforms with value-added human engagement. This approach, which proved to be especially effective during the pandemic, addresses a broader shift in how clients want to interact with their private bankers.


Committed to Philanthropy
In an environment where wealthy families are increasingly concerned about addressing social issues, HSBC GPB actively supports its clients in their pursuit of driving long-lasting change in their communities.

“As our clients think about their legacy and leaving sufficient resources for their children and grandchildren to enjoy, they are aligning their family business, philanthropy and sustainable investment activities so that they are reflective of the family’s values,” says Spring.

“They want to realise the synergies across all three parts of the family enterprise to amplify the impact of their work. In terms of investments, they are increasingly interested in impact investing.”

HSBC GPB is one of the first international banks in Asia to set up a philanthropy advisory team, which aims to help clients navigate a complex landscape to achieve their philanthropic goals.

A Leader in Succession Planning
As affluent Asian families expand their global reach, their wealth and succession planning needs can also become more complex. HSBC helps clients on this front through their trust business, which was established in 1946.

HSBC Trustee offers clients global coverage in Hong Kong, Singapore, Jersey and the U.S., particularly in Delaware and New York. With constant regulatory changes across jurisdictions, HSBC has the experience and expertise to not only provide best-in-class solutions, but also to ensure wealth structures remain compliant.

HSBC Trustee also creates opportunities for wealthy families by connecting them to other parts of the Group, whether for their everyday banking, credit and investment needs, or to assist them with their wealth structuring planning.

Looking ahead, HSBC GPB is set to continue to expand its capabilities and presence in Asia. HSBC unveiled its new private banking business in Thailand in 2021 and earlier this year launched a differentiated onshore private banking business in mainland China, where HSBC is the largest foreign bank offering comprehensive wealth management solutions. The bank is also looking to India as its next market for the private banking business.

Says Tan: “Capturing the massive opportunity from Asia’s fast-growing wealth creation and what is expected to be among the world’s biggest intergenerational wealth transfer events is core to the HSBC Group’s strategic pivot to Asia, where it aims to be the leading international wealth manager.”

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.

Navigating The Metaverse: Real World Opportunities Powered By The Immersive Virtual Space

J.P. Morgan summer reading room by Onyx in Decentraland.

As technology continues to impact busi­nesses and people around the world, inves­tors are trying to understand how these changes will affect their portfolios. The J.P. Morgan Tech Exchange 2022, held earlier this year, explored the changing technol­ogy landscape by bringing together lead­ing experts to present insights on topics ranging from digital assets to the net zero transition.

One of the buzziest areas of interest was the emergence of the virtual world known as the metaverse, a platform that could potentially transform the way we work, live and play. The metaverse has existed in some form for decades, with online gam­ing applications like Second Life in the early 2000s and, more recently, in immersive games that boast hundreds of millions of users and huge supporting economies.

While the definition of the metaverse is still fluid, and likely to be for the foreseeable future, most experts view it as the next, more immersive, version of the internet that replicates elements of the physical world. Many people already see the poten­tial of a new digital economy arising from the metaverse as a platform for users to create, buy and sell goods and services.

According to a J.P. Morgan report, Oppor­tunities in the metaverse,1 “The key point is that there is no one virtual world but many worlds, which are taking shape to enable people to deepen and extend social inter­actions digitally. This is done by adding an immersive, three-dimensional layer to the web, creating more authentic and natural experiences.”

The report also notes that the metaverse will likely penetrate every sector to some extent in the coming years, with market opportunity estimated at over US$1 trillion in annual revenue.2 A number of new tech­nologies have come together to enable this vision of the metaverse, including AR and VR headsets that have become cheaper and more powerful to improve user expe­rience and accessibility.

Meanwhile, blockchain solutions are driving the growth of digital currencies and non-fungible tokens (NFTs) that can facilitate economic transactions virtually. Recognizing the huge potential of the metaverse, J.P. Morgan was one of the first financial institutions to establish their pres­ence in this digital world.

J.P. Morgan summer reading room by Onyx in Decentraland.

A Fully Immersive Experience

While there is a vague sense of what the metaverse is, there is yet to be a clear con­sensus on what actually makes up this vir­tual realm. In a session at the J.P. Morgan Tech Exchange titled “Game On: The Meta­verse and Web 3.0”, John Riccitiello, Presi­dent and CEO at Unity, shared his views on where he thought this phenomenon was heading.

As head of the world’s leading platform for creating and operating interactive, real-time 3D (RT3D) content, Riccitiello is spearheading the company’s drive to grow RT3D adoption to non-gaming industries, including film and entertainment, architec­ture, construction and automotive.

“I haven’t seen many moments where there’s so much confusion about what something actually is. And part of that confusion is driven by some of the mega-cap companies that are trying to vision the metaverse through their own P&L. And so, they’re explaining the metaverse through the P&L advantage that they see for them­selves,” says Riccitiello.

“The consequence of that is you get some very odd notions out there; that it’s all about avatars and so on, and it’s just not about what so many of them are talking about.”

Riccitiello believes that the metaverse will be comprised of 3D, interactive and fully immersive digital places that will allow you to travel without leaving your home. “Imagine having a million places you can travel to from your living room, and fully immerse yourself in. A place that feels so real that it’s like being there, and you are going to be in the middle of it.”

For instance, consumers will be able to experience “live” concerts in their liv­ing rooms as if they were actually at the venue. “We can now put artists in places where they’re just as tall as you are, and you see them standing on the stage and hear as they perform live. And we can lit­erally increase the audience that can con­sume that live performance exponentially, and make it feel like you’re meters away,” explains Riccitiello.

Boundless Opportunities Across Industries

The economic possibilities and potential of the metaverse have enabled more market opportunities for every sector and indus­try. For instance, consumers with avatars can buy limited-edition, digitally branded clothing that they pick after browsing a vir­tual showroom. Entrepreneurs could start small businesses such as an art gallery to display their collections. And instead of having stores in every city, a major retailer might build a global hub in the metaverse that is able to serve millions of custom­ers. Many retail brands have already been experimenting.

The metaverse will also provide a mas­sive opportunity for business-to-business enterprises. For instance, a manufacturer could test their production line in a virtual environment in the metaverse at a lower cost. Imagine being able to build a com­plex digital twin of a factory, or industrial space, at massive scale, and test how robot­ics systems will interact with the physical environment.

Riccitiello notes that interest in the meta­verse is especially large in Asia: “My sense is this is the right time to make the invest­ments in that market to address the height­ened interest.”

Investing in the Metaverse

While it is still early in the game, oppor­tunities are already emerging for inves­tors to capitalize on the huge potential of the metaverse.

Cameron Chui, Executive Director and Equity Strategist of J.P. Morgan Private Bank in Asia

“We think it’s a little bit too early to say who’s going to be the winners out of this. So, when it comes to investing in the meta­verse, we think about the building blocks that will be necessary for the metaverse to be successful, and which companies already have well-established businesses in these areas,” says Cameron Chui, Execu­tive Director and Equity Strategist for J.P. Morgan in Asia.

In particular, Chui highlights different categories of themes that could benefit from the metaverse.

Firstly, the growth of the metaverse is likely to require more processing power, which will in turn increase demand for advanced chips and give a boost to semi­conductor companies. A similar explosion in data that will result from activity in the metaverse will fuel the need for more data center and cloud infrastructure-related companies to house and process this massive volume of data.

Gaming companies that have strong intellectual property or gaming experi­ence will also be well positioned to benefit from the metaverse, as they have experi­ence in creating content that keep users engaged in a particular virtual universe for an extended period of time.

Meanwhile, social media companies have been very successful in fostering interaction between people and giv­ing their users a sense of community, which will be a key part of the metaverse experience. Finally, companies with expe­rience in digital payments will benefit from the commerce that will take place in virtual worlds.

“These are already well-established busi­nesses, and even without the metaverse they will perform perfectly fine,” says Chui. “But if you give them the additional option­ality of the metaverse opportunity as well, this will be a new revenue stream for these companies.”


 1 Opportunities in the metaverse: How businesses can explore the metaverse and navigate the hype vs. reality.
Available at:  https://jpmorgan.com/metaverse Date as of: February 2022.

2 Grayscale, November 2021. ‘THE METAVERSE Web 3.0 Virtual Cloud Economies.’
Available at: https://grayscale.com/wp-content/uploads/2021/11/Grayscale_Metaverse_Report_Nov2021.pdf Date as of: July 2022.


Staking a Claim in the Metaverse

Reflecting its commitment to leading-edge technologies, JPMorgan Chase & Co. maintains a virtual space in the meta­verse known as the Onyx Lounge, which is located at Decentraland.org.

The Onyx Lounge was created by Onyx, a J.P. Morgan business formed in 2020 to build commercial blockchain-based appli­cations, products and infrastructure. J.P. Morgan was motivated to set up the Onyx Lounge by the idea that the metaverse will become a primary channel for com­merce, providing richer, more immersive experiences.

Tyrone Lobban, Head of Blockchain Launch & Onyx Digital Assets at J.P. Morgan

“As a global bank with a leading pay­ments business, offering payments solu­tions in this new paradigm will enable our clients to meet their own customer’s evolving behaviors by providing seamless payment capabilities across traditional and digital currencies,” says Tyrone Lobban, Head of Blockchain Launch & Onyx Digital Assets at J.P. Morgan.

“We also believe that open, interoper­able metaverses will be based on block­chain technology, so there is a natural rea­son for us to participate more deeply given our blockchain expertise and thesis.”

Lobban notes that being an early adopter in the metaverse demonstrates to J.P. Morgan’s clients that Onyx is com­mitted to staying abreast of the emerg­ing trends and committed to finding new ways of doing business based on client demand.

“While it is not clear as to how the meta­verse will evolve, what is clear is that the significant investment in different meta­verse solutions, the attention being paid by large tech companies, the maturing of decentralized blockchain protocols, and the ability for digital assets to create new ownership models with user-centric control, will mean that the metaverse as a concept is almost certainly here to stay—and, in fact, we will probably see special­ized metaverses focused on different domains in time,” he explains.

The Onyx Lounge

Earlier this year, J.P. Morgan released its 2022 Summer Reading List in the Onyx Lounge. A summer tradition for more than two decades, this the first time the list has been presented in the metaverse. For a limited time, visitors can use an avatar to explore a curated interactive library exhibit at the lounge, where they can learn about the books and view exclusive interviews with select authors.

Looking ahead, Onyx will continue to explore and participate in multiple meta­verse environments.

J.P. Morgan Tech Exchange 2022

The Seventh Annual J.P. Morgan Tech Exchange brought together a highly impactful group of CEOs and entrepreneurs with the world’s most influential investors for an opportunity to engage in direct dialogue.

“This event has steadily emerged to become one of the most consequential forums on technology investment—and that’s because of the spotlight we put on Asia. It is recognition of Asia’s growing importance as a center of innovation and consumer demand, plus a confirmation that our region is the bedrock of increasingly complex global supply chains. From advanced electronics to semi-conductors, Asia is moving towards the heights of the global value chain,” said Kam Shing Kwang, CEO of J.P. Morgan Private Bank in Asia & Vice Chair of Investment Banking for Greater China at J.P. Morgan, in her welcome remarks.

Some of the illustrious speakers at the event included: Jack Zhang, Co-founder and CEO of Airwallex; Andrew Forrest, Chairman and Founder of Fortescue Metals Group and Fortescue Future Industries; and Robert M. Gates, the 22nd U.S. Secretary of Defense.

Participants were also able to explore the latest developments in the tech world through a virtual showcase at the event.

Click here for more information

learn.more@jpmorgan.com

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.

Leading The Green Finance Revolution In Thailand

Saranya Arunsilp, Country Head, Thailand, Global Private Banking and Wealth Management at HSBC

As the net zero transition becomes top of mind for business leaders and policymakers around the world, affluent investors in Asia are gradually recognising the importance of incorporating sustainable solutions into their portfolios.

In Thailand, high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals and their families are beginning to incorporate ESG (Environmental, Social and Governance) factors into their investment decisions, says Saranya Arunsilp, Country Head, Thailand, Global Private Banking and Wealth Management at HSBC.

However, as the bank ramps up its efforts to educate clients on the importance of sustainable finance, awareness of ESG is growing.

“ESG investments are gaining popularity among Thai investors as HSBC has been educating our clients and offering them relevant sustainable finance solutions,” explains Arunsilp.

“Our clients are starting to understand that sustainability is important for growing their business and investments, but it will take some time before they see the performance associated with sustainable products.”

A more conducive regulatory environment is also expected to fuel demand for sustainable investments. Earlier this year, the Stock Exchange of Thailand introduced a Sustainability Reporting Guide for listed companies, together with ESG metrics for each industry group.

HSBC is well-positioned to capture a big slice of this growing green market as it has established an enviable track record of completing sustainable finance deals in Thailand. The bank recently supported a prominent global petrochemical company in issuing its debut THB10 billion (US$283 million) Sustainability-Linked Bond (SLB). This deal was the largest THB SLB issuance in Thailand. 

HSBC was also the Joint Lead Manager and Joint Bookrunner for the first green bond issued by a Thai policy institution, the Bank for Agriculture and Agricultural Cooperatives. The proceeds were then used to fund forestry and environmental conservation projects.

In another milestone, the bank introduced the first Green Deposits in the country for two large Thai corporates. The Green Deposit aims to encourage Thai companies to fulfill their sustainability objectives by investing their surplus cash balances with HSBC, which will then be allocated to eligible businesses and projects.

Furthermore, HSBC completed a trio of firsts for a Thai client by executing their inaugural Sustainability-Linked Loan, Sustainability-Linked Supply Chain Financing Solution and Sustainability-Linked Hedge.

A Deeper Presence on the Ground

To more effectively service its HNW and UHNW clients, HSBC opened a new private banking business in Thailand last year. The move is timely as rising affluence in the country is driving demand for wealth planning, investment diversification and international banking.

The expected rebound in intra-regional trade and activity is also expected to lead to the creation of private wealth in Thailand as businesses expand. Against this backdrop, international banks like HSBC—with a global footprint and full range of capabilities to serve the fast-changing needs of affluent clients both onshore and offshore—will have a competitive edge in the country.

In recent years, The Bank of Thailand has also introduced a series of measures to relax foreign exchange regulation and encourage greater flexibility in the financial markets under the Capital Account Liberalisation Master Plan, opening up opportunities for selective offshore investments.

The new private bank is HSBC’s second onshore business in Southeast Asia after Singapore, and will provide Thai clients with access to international capital markets by leveraging its existing infrastructure of advisory, investment methodologies, controls and systems in Asia. The Thailand-based team will cover client management and advisory services, while clients’ assets will be booked in HSBC Global Private Banking in Singapore, a preferred wealth management hub for Southeast Asian HNW individuals.

“We successfully launched our onshore private banking business in Thailand last year, and second onshore private banking business in ASEAN, to offer a distinctive, onshore experience to serve growing wealth needs in Thailand. Our team is able to leverage the HSBC Group’s expertise and global network to serve our Thai friends better,” says Arunsilp.

As private banking is very much a people-centric business, Arunsilp believes that it is important to have a dedicated team on the ground to develop a more intimate relationship with clients, and better understand their unique wealth needs.

The expansion of the private banking business in Thailand is part of HSBC’s broader strategy to grow its wealth management footprint in Southeast Asia and invest in its wealth capabilities as it aims to provide best-in-class products and services for clients, and deliver on its ambition to become the leading wealth manager in Asia.

Giorgio Gamba, CEO of HSBC Thailand and Saranya Arunsilp, Country Head, Thailand, Global Private Banking and Wealth Management at HSBC

Achieving Net Zero

HSBC’s Thai businesses will also play their part in helping the bank achieve its target of transforming its operations and supply chain to net zero by 2030, and to do the same for financed emissions in the portfolios of its clients by 2050 or earlier.

This transition will involve an investment of between US$750 billion and US$1 trillion over the next 10 years. Financing of coal-fired power and thermal coal mining will also be phased out by 2030 in markets under the European Union and Organisation for Economic Co-operation and Development (OECD), and in other markets by 2040.

Giorgio Gamba, CEO of HSBC Thailand

“Achieving net zero requires significant changes. The financial services industry has an important role in ensuring that capital is allocated to support projects and investments needed to fulfill these goals,” says Giorgio Gamba, CEO of HSBC Thailand.

“The transition to a net zero economy is the key to unlocking long-term sustainable growth, protecting the financial system from climate risk and safeguarding society,” he adds.

HSBC’s sustainability strategy can be boiled down to three key components: becoming a net zero bank; supporting customers in their transition journey; and unlocking new climate solutions. In doing so, the bank also wants to help transform sustainable infrastructure into a global asset class through the development of a pipeline of bankable projects.

HSBC views collaboration with its clients and other stakeholders as key to achieving its sustainability objectives. Says Gamba: “In partnership with our clients, we will help develop de-carbonisation plans starting with high transition risk sectors. This will allow us to understand how they are incorporating climate change into their business and to identify how we can support their transition.”

 

 


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.


 

 

J.P. Morgan: Finding the Right Approach To Sustainable Investing

With the world facing challenges on multiple fronts, investors are increasingly looking for robust solutions and strategies that can help them make a positive impact through their investing activities. In particular, many are keen to incorporate Environmental, Social and Governance (ESG) factors into their investment processes.

Sustainable investing can come in many forms, but generally involves four main approaches. These include integrating ESG factors with traditional considerations to assess the risk/reward profile of an investment; screening out controversial companies that do not meet sustainability criteria; identifying those that are ranked highly in their sector based on sustainability factors; and investing in companies that deliver a measurable social or environmental impact.

To help their clients navigate this increasingly complex space, J.P. Morgan is enhancing its sustainable investing capabilities, and zooming in on key areas of sustainability that it believes will generate the most meaningful impact.

One such area is carbon sequestration in forests worldwide, which will play an important role in the burgeoning carbon offset market. Forests sequester carbon by capturing carbon dioxide from the atmosphere and transforming it into biomass through photosynthesis. Sequestered carbon is then accumulated in the form of biomass, deadwood, litter and in forest soils. As such, forests can help to mitigate carbon emission by acting as a carbon reservoir.

Aiming to become an active participant in carbon offsets, J.P. Morgan recently acquired Campbell Global, a leading player in forest management and timberland investing. Through this investment, the bank is able to strengthen and diversify its sustainability focus through carbon sequestration, and provide investment opportunities related to climate, conservation and biodiversity.

Campbell Global is a recognized leader in global timberland investment and natural resource management. The U.S.-based firm has more than three decades of experience, US$5.3 billion in assets under management, and manages over 1.7 million acres worldwide with over 150 employees.

Seeing the Whole Picture

Another key aspect of an effective sustainable investing strategy involves having full visibility of one’s investment portfolio, especially in terms of being able to monitor ESG risks. J.P. Morgan is helping its clients do this more effectively through its recently acquired subsidiary OpenInvest, a leading financial technology company that helps investors better understand the non-financial impact of their portfolios. The firm’s proprietary platform scrapes all manner of data so that it will eventually be able to create portfolios that are more in line with investors’ values.

This will help satisfy the growing ranks of investors who demand a clearer and more holistic understanding of the ESG impact of their portfolios, and use those insights to make more informed investment decisions that better align with their goals.

One key obstacle to higher-quality sustainability-related data and transparency, however, is the lack of a standardized regulatory framework. Creating a globally aligned taxonomy will be critical to improving the reliability of ESG data for investors.

Some progress has been made in this regard. In November last year, for instance, ASEAN released the “ASEAN Taxonomy for Sustainable Finance – Version 1”. This initiative provides a framework for discussions with official and private sector stakeholders to work together on the development of the ASEAN Taxonomy. However, a truly cohesive regulatory framework for ESG reporting and disclosure globally appears to be some way off.

In the meantime, J.P. Morgan is helping clients navigate the inconsistent regulatory landscape through specialist teams that are dedicated to selecting specific sustainability strategies through meticulous due diligence.

Onboarding Specialist Talent

With growing interest in sustainable investing, J.P. Morgan is investing in new talent to provide the necessary expertise to guide clients on their journey. For example, it recently made two key hires from Calvert Research and Management to help grow the private bank’s sustainable investment options and enhance ESG integration.

Significantly, J.P. Morgan is one of the few financial institutions to feature a climate scientist on its sustainability team. Dr. Sarah Kapnick, Senior Climate Scientist and Sustainability Strategist for J.P. Morgan, joined the bank in 2021 to support sustainability and climate action efforts, and advise on new business and investment opportunities and risks.

“Our approach has been to start bringing in subject matter experts; climate experts like me who do climate modeling and understand physical risk, but also people with experience with integrated assessment modeling. So we’re bringing experts in across the bank with the idea that climate sits within every line of business,” says Dr. Kapnick.

Dr. Kapnick’s team not only produces thought leadership on climate, which continues to be the primary focus of sustainability strategy, but also speaks directly to clients on how climate risks can impact their portfolios, as well as identify potential opportunities in this space.


Investing in the Fight Against Climate Change

J.P. Morgan has developed a “Three Rs” approach to climate investing that investors can adopt to play a role in helping achieve a “net zero” world, where emissions from a range of sources are brought to zero or balanced out by carbon removal.

Investors can participate in these three approaches—greenhouse gas reduction, removal and retrofitting—through investment opportunities in traditional and emerging technologies.

“The main way to deal with climate change is to reduce emissions as much as possible, and get to net zero as fast as possible, through traditional methods such as clean energy. But there is also energy efficiency, a focus in Europe right now, and process transformation, which includes reducing emissions from concrete or reducing emissions from agriculture,” Dr. Kapnick explains.

“Then you also have carbon removal, either through nature-based or mechanical solutions. And then the last part is retrofit. It’s the adaptation part of climate change, where we need to adapt to the new climate that we will have now and in the future because society was built on a climate that no longer exists.”

By employing targeted strategies such as the Three Rs developed by leading sustainability experts, and combining them with cutting-edge technology, J.P. Morgan is helping investors capture opportunities in sustainability and playing a role in the urgent transition to a low-carbon world.

Says Dr. Kapnick: “With estimates of what the capital needs are for the low-carbon transition, all of that money can’t come from governments. For capital expenditures and also for new technologies that are being developed, funding has to come from the private sector as well. As a result, helping our clients understand what those problems are, and how to efficiently deploy capital, is a critical piece of the puzzle.”


Dr. Sarah Kapnick, Managing Director, Senior Climate Scientist and Sustainability Strategist at J.P. Morgan explains:

“The main way to deal with climate change is to reduce emissions as much as possible, and get to net zero as fast as possible, through traditional methods such as clean energy. But there is also energy efficiency, a focus in Europe right now, and process transformation, which includes reducing emissions from concrete or reducing emissions from agriculture.”


Where’s the Snow?

Dr. Sarah Kapnick, Sustainability Strategist and Senior Climate Scientist at J.P. Morgan, discusses the economic implications of lower snowfall on winter sports.

Climate change is currently making snow scarcer in regions where snow sports have traditionally thrived. Recent Olympics have increasingly depended on snow-making machines as insurance when holding events in previously snowy regions that no longer have reliable snowfall due to warming (Sochi) or in cold regions that support snow-making but do not typically have snowfall (Beijing).

Snow on the ground requires two conditions: below-freezing temperatures and water in the atmosphere to form snowstorms. As global warming continues, the total number of snowy days around the world can be expected to decrease. For example, in the U.S. the snow sports season could be one week to several months shorter by 2050, depending on the location and emissions scenario.

Warming and changes in storminess have also increased variability in snowy days and snowy years, with higher likelihoods for “snow droughts,” months to years in which snow does not fall at all.

Snow sports enthusiasts may thus be forced to chase snowfall around the globe. They may only visit their favorite locations when snowfall has been confirmed, or prioritize visiting locations with the most snow in the world, like Japan. An extreme response may see them forgo snow sports altogether.

Declining lift ticket sales and equipment rentals would not be the only potential sources of lost revenue. Transportation, hotels, shopping and entertainment would also likely suffer losses. This would affect resort profitability, the local economies and real estate prices unless tourism from snow sports was replaced. The snow resort industry is forming partnerships or consolidating into entities large enough to diversify snow risk by offering all-access passes to far-flung properties in numerous countries and continents.

The impact of climate change on winter sports—disappearing snow and its follow-on effects—has mobilized several groups to work on solutions, research and communications to raise awareness.

 Climate investing approaches and how they work Investment examples


Click here for more information

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Next Gen Success: Getting The Talent On Your Side

Kam Shing Kwang, CEO for Asia Private Bank and Vice Chair for Greater China Investment Banking at J.P. Morgan

The ranks of next generation family business leaders are swelling in Asia and beyond, with some 680,000 individuals with a net worth of at least US$5 million expected to pass on wealth to their heirs by 2030.¹ This unprecedented inter-generational wealth transfer—which represents almost one-quarter of the world’s wealthy population—is happening as a growing number of budding entrepreneurs are minting new fortunes by disrupting the status quo with innovative offerings.

Most of these young entrepreneurs are tossing out the rule book to find new areas of growth and novel ways of generating value. This often involves leveraging digitalization to drive performance, while maintaining a focus on sustainability to ensure business resilience and longevity.

Among wealthy clans, potential second and third generation members keen to run their family’s traditional businesses are few and far between. Across industries from real estate, trading and manufacturing, these new breed of business leaders aim to transform their existing businesses to create a legacy of their own, one that more accurately reflects their values and vision.

“The new generation is quite different from the patriarchs and the matriarchs who founded the family business,” says Kam Shing Kwang, CEO for Asia Private Bank and Vice Chair for Greater China Investment Banking at J.P. Morgan. “They have their own style of leadership, unique view of wealth and legacy, and the competitive environment they operate in today differs greatly from their parents’ time. Next-gen members who assume control of their family businesses today are keen to stamp their own personal character on the business. They want to be seen as leaders in their own right.”

However, pivoting a successful enterprise, often with a long history, requires the support of the existing team within the organization, and fresh talent who have the skillsets to drive change. Simply put, next generation leaders must not only find ways to gain the trust of long-time corporate leaders, but also seek out external executives amid increasing competition for the best and brightest across industries and geographies.

Preparing for Transition

A major obstacle facing next-gen leaders is the continued involvement of the previous generation even after handing the reins to their heirs. Understandably, there will continue to be a high level of deference to the patriarchs and matriarchs of the family business, even after they step aside. While it’s useful for the younger generation to consult the old guards on matters pertaining to the business, an overreliance on their predecessors may undermine the authority of the new leader.

To overcome this issue, the family should clearly identify and articulate the accountability and responsibilities of incoming leaders. The previous generation should also stay within the boundaries of an advisory role as much as possible. Until this happens, the lines between the generations will be unclear, leading to frustrations and possibly inter-generational conflicts.

The long-term success of a family business requires striking a delicate balance between honoring tradition and embracing change. Therefore, it is important for patriarchs and matriarchs to discuss plans with their children for modernizing the business while not disregarding the family’s core values. One way to achieve this is to involve next-gen family members in the day-to-day business operations well before handing over control.

Proving their Worth

Despite their best efforts, however, some next-gen leaders may find it difficult to convince their parents to hand over full control. One solution is for potential leaders to run one aspect of the business to showcase their leadership skills, before assuming control of the entire enterprise.

For instance, next-gen entrepreneurs could establish a new business line, seek to improve the performance of an existing one, or even manage the family office. If successful in these endeavors, the heirs can earn the trust and respect of not only their parents, but also their employees.

Furthermore, Kwang believes that communication is the key to winning over employees. “Don’t be afraid to over communicate and share with your people what you are like, what your expectations are, your visions and your strategies, so that your team knows exactly where you are coming from.”

She also advises new leaders to be humble and empathize with employees, helping them achieve their goals whenever possible. “I often ask my team ‘How I can help?’ And if you’re able to help them solve some of their problems, you gain trust and credibility. At the end of the day, if you’re the leader, you have to demonstrate that your team can rely on you as much as you on them.”

Attracting the Right Talent

With technological disruptions becoming the norm for many businesses, organizations will need to regularly acquire new skills and knowledge to succeed. This is even more crucial for family businesses moving into new sectors or seeking to transform the way their companies operate.

To attract the right talent, new leaders must clearly articulate their company’s vision and values. This is especially important when hiring younger employees, as they tend to look up to leaders whose values are aligned with their own.

“It’s important for an organization to be visible, so that people know what you stand for,” says Kwang. “At J.P. Morgan, we have a distinct culture and values that mostly only people within the firm know. So we’ve decided that we need to come out and articulate our values to our existing and potential clients, as well as prospective employees. This will help especially in attracting younger talent who want to work for an organization with similar values to their own.”

For instance, the bank has made its stance clear on climate change by declaring its intention to become carbon-neutral by 2030, and to help companies on their own journeys towards that goal. J.P. Morgan’s employees are also given the opportunity to spend up to three months abroad working on charitable projects that help to bring about positive social change.

“These efforts help employees feel that their values and the organization’s are aligned, and that this is an employer that can help them realize their personal goals,” says Kwang.

Designing effective compensation and incentive programs is also important to attract and retain employees, especially if the business is pivoting to new areas or changing their processes.

When compensation is based on meritocracy and is managed carefully, it aligns people’s behavior with the company’s strategy and generates better performance.² “When it’s managed poorly, the effects can be devastating. For example: the loss of key talent; demotivation; misaligned objectives; loss of client confidence and poor shareholder returns.”

Furthermore, companies must implement training and development initiatives to ensure that the skills and career progression of their employees remain relevant.


Kam Shing Kwang, CEO for Asia Private Bank and Vice Chair for Greater China Investment Banking at J.P. Morgan says,

“The new generation is quite different from the patriarchs and the matriarchs who founded the family business. They have their own style of leadership, unique view of wealth and legacy, and the competitive environment they operate in today differs greatly from their parents’ time. Next-gen members who assume control of their family businesses today are keen to stamp their own personal character on the business. They want to be seen as leaders in their own right.”


Fostering Innovation

Amid a fast-changing business landscape, innovation and agility have become key competitive advantages for companies. To succeed, next-gen leaders will need to foster a culture that promotes these attributes.

Kwang advises rewarding employees who are stepping up to drive innovation within the organization. “One way you can encourage innovative thinking is to prominently recognize people who have contributed to innovation,” she says. “This will help inspire others to think out of the box [to come up with] different ways of working. It’s also important that you give employees the time and space away from their usual work to work on projects that help improve performance.”

Next-gen leaders should also strive to adopt best practices gleaned from the experiences of other businesses, or by engaging external advisors or mentors. Through an annual initiative called the FLEX program, J.P. Morgan provides next-gen clients an exclusive platform to exchange ideas and network with their peers as well as access to expert advice.

The bank, in partnership with 6E Capital, has also created a special event series called E+ Circle that brings together industry veterans, financial advisors and entrepreneurs to network and exchange views and insights on topics such as growth, innovation and leadership. Kwang advises next gen leaders to be open to soliciting support from external parties, which could help develop a more dynamic and innovative organization.

“We like to play a role in helping the next-gen because we want to make sure they are aware of all the opportunities as well as challenges ahead and that we are here to support them with the right network and solutions, just as we have done with their parents,” she says. “So we spend a lot of time thinking about how we can help them chart their unique path forward.”


SUPPORT FOR NEXT GENERATION LEADERS

J.P. Morgan offers its next generation clients a number of programs that aim to advance their learning and development.

Tsinghua University School of Economics and Management:

J.P. Morgan partnered with Tsinghua University School of Economics and Management on two programs designed to develop next-gen leaders.

In the first program, J.P Morgan specialists and MBA students from the School of Economics and Management worked jointly on consulting projects. With the bank’s specialists serving as mentors to the students, the aim of the program was to promote a two-way exchange of ideas and skills.
The second program was a classroom partnership with the Tsinghua YES Program that focused on family succession, with the aim of preparing the next generation of Chinese business leaders.

Campus Recruitment:

Every year, J.P. Morgan offers summer internships that provide penultimate year students with on-the-job training and experience.

They will attend senior speaker events, skills-building workshops and networking opportunities. Interns who complete the program may receive an offer of full-time employment.

E+ Circle – Entrepreneurs & More:

An exclusive invitation-only platform for next generation business leaders and entrepreneurs created by J.P. Morgan in partnership with 6E Capital. The initiative features a series of special events that bring together industry veterans, former C-suite executives, financial advisors and entrepreneurs to network as well as exchange views and insights on topics such as growth, innovation and leadership.

This intimate and private forum addresses top-of-mind questions to build businesses and improve performance through achieving operational excellence, talent, financial, capital management and innovation.

FLEX Program:

J.P. Morgan offers an invitation-only summer event series designed to equip next generation participants with the necessary skills to be effective leaders. Featuring internal and external speakers, topics of interest range from sustainable investing to blockchain and digital finance.


1. Wealth-X Family Wealth Transfer Report 2021. Data as of 2021.
2. Harvard Business Review. Data as of January-February 2021.

 

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