Major Banks like JP Morgan and HSBC Achieve Record High in Attracting Asian Assets

[Image source=AFP Yonhap News]

[Asia Economy Reporter Park Byung-hee] Despite COVID-19 and the downturn in China's real estate market, the scale of private equity and hedge fund investments by wealthy individuals in the Asia region this year has reached an all-time high. This is because the number of ultra-high-net-worth individuals in Asia has surged, prompting global banks to expand their Asia divisions and actively attract assets.

According to Bloomberg News, the alternative investment divisions of JP Morgan Chase and HSBC Bank have raised record amounts of funds this year.

The private banking division of JP Morgan Chase attracted more than twice the amount of funds from Asian clients compared to last year, setting a new record.

Albert Yang, head of JP Morgan's Asia alternative investment division, explained that hedge fund investment demand has surged several times this year, and interest in private equity has doubled, with funds raised from ultra-high-net-worth individuals in Asia reaching tens of billions of dollars.

In the case of HSBC, it raised $2.3 billion in alternative investment funds last year, of which $1.34 billion came from Asia. This year, funds raised from Asian clients increased by more than 50%, setting a new record.

Consulting firm Knight Frank expects the number of ultra-high-net-worth individuals to increase the most in the Asia region in the future. Knight Frank forecasts that the proportion of Asians among ultra-high-net-worth individuals with assets over $30 million worldwide will rise to 24% by 2025. Ten years ago, this ratio was 17%.

Accordingly, global banks are strengthening their strategies to target the Asian market. Swiss investment bank Credit Suisse and private equity firm Apollo Global Management recently relocated key personnel to the Asia region.

However, the recent downturn in China's real estate market has emerged as a variable. According to Hedge Fund Research, hedge fund losses last month were the largest since the COVID-19 pandemic was declared in March last year.

Hong Kong-based hedge fund BFAM Partners suffered losses exceeding 10% through November this year. Due to losses in the Chinese real estate sector, it is likely to record an annual loss for the first time in nine years since its inception. BFAM Partners manages assets totaling $4 billion.