Investors in the Asia-Pacific region are generally more aggressive in their risk-taking approach, compared with their European peers, according to a recent research report.
The report, by digital banking solutions provider Avaloq, shows that wealth management clients invest for a variety of reasons, from planning for their retirement to providing for more acute costs, such as an unexpected future healthcare bill.
Singaporean investors, at 73%, led all surveyed markets for savings towards retirement, whereas in Hong Kong, which has one of the most expensive property markets anywhere in the world, 55% are directing their savings towards property investments. China also leads all markets for savings towards future personal healthcare costs (67%) as well as savings towards the costs of raising younger generations (64%).
Many investors also value a hands-on approach to managing their wealth, with over 75% of all surveyed markets in Asia-Pacific stating that they manage their own investments.
Robo-advisory features the most prominently in Asia, with investors in China (52%), Hong Kong (36%) and Singapore (23%) leading the way for investments done via robo-advisers. However, despite reduced prominence in the investment landscape currently, there is keen and growing interest from China (38%) and Hong Kong (31%) in planning to use financial advisers in the future, hinting at potential new client onboarding opportunities to come.
“Investors today think about their investment goals in a more abstract way, and this underlines a need for organizations to leverage client data and preferences that can support them in achieving tailored goals,” says Avaloq’s Gery Dachlan, managing director for South Asia and Australia.
Risky business
Investors in China (42%), Hong Kong (34%) and Singapore (21%) all say that they are fairly aggressive towards approaching and managing risk, comparatively more than their European peers (who averaged 14% in the ‘fairly aggressive’ category). Risk-taking investors in these markets view volatile market fluctuations as opportunities for investment alpha. This is an important consideration for wealth managers developing new products or advisory services to consider, when engaging with a market of agile, opportunity-seeking investors.
Avaloq’s report also analysed aggregated, anonymised end-client data, stored by banks and wealth managers using Avaloq systems in the Europe, Middle East and Africa region. The data revealed that the relationship between an investor’s self-reported knowledge level and the risk class of products they prefer forms a ‘check-mark’. At a basic knowledge level, investors go for medium-risk class products. At an intermediate knowledge level, they prefer low-risk products. At an expert knowledge level, they tend towards higher-risk products.
Choosing the right mix
While the range of assets that investors invest in is unique to each market, a few do stand out as favourites. Publicly traded stocks, cash, and investment funds are often the go-to favourites in most markets.
Given China’s strong economic growth and global investments, it is unsurprising that the market leads globally for its appetite in real estate (60% invest in this asset class), investment funds (78%), publicly traded stocks (72%).
For Hong Kong investors, interest was highest in bonds (58%), cash holdings (65%) as well as exchange-traded funds and traditional investment funds (both 55%). Singapore was more balanced with an even spread across all asset classes.
An interesting outlier includes Japan’s general disinterest with cryptocurrencies (only 11%) whereas almost half (49%) of all investors in India have invested in this new asset class. The same is true for private equity investments in both Japan (6%, the lowest globally) and India (48%, the highest globally).
