Hong Kong: China is expected to have the highest growth potential of any wealth management market in Asia over the next two years, according to an annual industry survey by Barclays Capital released on Monday, 23 April.
About 81% of respondents expect assets managed by the industry in greater China to grow by 16% annually or higher over the next two years. Only 65% of respondents to last year’s survey were this bullish on growth prospects.
At the same time, Barclays said wealth managers were slightly less optimistic about the growth potential of India this year compared with last year.
“People have a more positive view of China versus India. They’re bullish on both countries, but they are more bullish on China,” said Peter Hu, Barclays Capital’s head of investor solutions for Asian markets outside Japan.
The survey of 73 wealth management organizations overseeing more than $5 trillion (Rs210 lakh crore) in assets also found they plan to recommend customers put more money into alternative investments like hedge funds over the next two years.
The survey by the unit of UK lender Barclays also found wealth managers are becoming more comfortable recommending alternative investments, with 52% expecting to allocate a greater percentage of money to the asset class over the next two years.
Hu said alternative assets included not just hedge funds, but private equity, real estate and total return funds. He said wealth managers were clearly feeling a need to widen their search for potential returns.
“With the so-called traditional asset classes, a number of them have started to struggle in terms of absolute returns. For example, interest rates are quite low, interest-rate curves are quite flat, credit spreads are quite tight,” he said. “With equity markets, a lot of them are at or close to all-time highs.”
The survey found wealth managers expect acquiring and retaining staff to be the industry’s biggest challenge in Asia, with 88% citing it as difficult or very difficult.
The problem was highlighted in recent weeks by several high-profile defections at private banks in Hong Kong and Singapore.
The number of high net-worth individuals in Asia—people with more than $1 million in financial assets excluding their homes—grew 7.3 % to 2.4 million in 2005, according to a report by Merrill Lynch and consultants Capgemini.
This topped a 6.9% rise in North America, which had 2.9 million, and 4.5 % in Europe, which had 2.8 million.
As a result, private banks have been ramping up their operations in the region, frequently poaching staff from competitors.