[Super Rich] "Believe in China's Economic Recovery" Asian Billionaires Trust Reopening

Expansion of China Investment Share Over the Next 5 Years
Focus Also on Developed Country Bonds
Healthcare and Medical Sectors Are the Top Themes

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Billionaires in the Asia-Pacific region have identified China as the country where they plan to increase their investment allocation over the next five years. This is an unusual choice amid limited 'reopening' effects and growing concerns over escalating US-China tensions. However, they responded that they intend to increase the scale of investment in China, which had decreased since the COVID-19 pandemic, and observe it from a long-term perspective.

On the 3rd (local time), UBS, Switzerland's largest investment bank (IB), released a 'Global Family Office' report containing these findings.

Family offices are firms dedicated to managing the assets of high-net-worth individuals. The report includes survey results from 230 family office firms in Asia. The average net assets per participating family office were $2.2 billion (2.893 trillion KRW), and the average assets under management were $900 million (1.1835 trillion KRW). They invest 37% of their assets in stocks and 15% in bonds.

Among Asia-Pacific family offices, 30% said they would increase their investment allocation in the Greater China region over the next five years. Previously, family offices in this region had reduced their investment allocation in Greater China from 40% in 2021 to 23% last year. Only 6% responded that they would completely exclude China from their future investment portfolios.

Tommy Leung, Head of Global Family Office for the Asia-Pacific division at UBS, explained, "Despite a brief pause in recent years, the growth we have witnessed in China over the past 10 to 20 years has been unprecedented," adding, "We cannot ignore an economy with an annual growth rate of 5% and a size of $18 trillion (GDP basis, approximately 20.38 quadrillion KRW)." Alex Yu, CEO of 3 Capital Partners, a Hong Kong-based family office managing $500 million (about 660 billion KRW) in assets, said, "China's reopening is a positive signal for the economy and Chinese stocks," and "We still maintain the view that (China's) stock valuation is relatively low." He added, "Not everything will happen overnight," and "We believe in the long-term recovery of the Chinese economy."

However, Asia-Pacific family offices cited geopolitical risks such as US-China tensions as their biggest concern. They also viewed interest rate hikes and liquidity tightening by central banks worldwide as burdensome factors for investment.

Additionally, Asia-Pacific family offices plan to increase their allocation to developed market bonds over the next five years (40%) as part of portfolio diversification. The stock sectors/themes they are most interested in are medical devices and digital healthcare.

Furthermore, Asia-Pacific family offices were found to invest half of their assets in the Asian region. Seventy-seven percent of private equity investments were placed in the tech sector. The proportion investing in hedge funds for asset diversification was half, significantly exceeding the global average (one-third).