How Crazy Rich Asians Are (Literally) Cashing In on the Pandemic
Every crisis is an opportunity, and based on historical data, economic growth has often arrived on the coattails of times of trouble. The economy is used to rebuilding itself time and again, and it looks like the ultra-rich are preparing for the opportunities that will arise post-pandemic.
According to Joseph Poon, the head of the private bank of DBS Group Holdings Ltd., Southeast Asia’s biggest lender, the wealthy population of Asia is preparing to make the most of these opportunities when markets and private equities regain momentum.
In an interview with Bloomberg, Poon reported that clients have increased their cash holdings to about 40 percent of their portfolios since the pandemic began. That’s 30 percent more than the amount of cash holdings pre-pandemic.
“Clients are holding a lot more cash than usual. It’s a very interesting phenomenon,” said Poon. “Ultra-high-net-worth clients believe there will be a good opportunity in the marketplace once the pandemic impacts have flown through the economy.”
With bigger cash holdings, the wealthy investors of Asia can now focus on using the cash to expand their businesses, businesses with partners, and investments in booming industries like e-commerce and logistics. This means they might miss out on opportunities in the stock market, but it appears they can afford it.
Among the clients of DBS Private Bank are the wealthiest of Asia with at least S$5 million (USD$3.65 million) in assets. Their network is growing as the world’s richest family businesses in the U.S. and Europe are looking at Singapore as the next wealth management hub. The private bank has seen new assets balloon to S$5 billion (USD$3.65 billion) in the first half of 2020, when the pandemic was still in full throttle. The assets of the bank’s clients grew by seven percent at the end of June compared to June 2019, pre-pandemic.
Singapore-based DBS has already expanded to Thailand, where it caters to investment-hungry Thai clans, and is looking to expand its Philippine market where it only has a representative office.
“We kicked off some discussions last year and are still in the midst of structuring the best way to tap on the growing onshore high-net-worth individuals’ increasing investment appetite,” said Poon. “Still, it’s early days.”
The Philippines is home to over 52,000 dollar millionaires, according to Credit Suisse 2019 global wealth report, but only over a fraction of total millionaires meet DBS Private Bank’s $3.65 million requirement.