Zhao Yue, general manager, Private Banking Department of China Merchants Bank shares her views with Asian Private Banker in ‘The Final Word’, a year in review by the region’s private banking leaders as they share their thoughts and opinions on key issues around industry trends, business performance, investments, regulations, and technology.
Investments | From a portfolio perspective, how important will (a) Chinese assets and (b) alternative investments be for delivering clients’ objectives over the next five years?
Although high-net-worth clients in China have always been relatively underweight in equity and alternative assets, the proportion of assets in this segment will increase in the following years as China will continue to be a major driving force in the global economic revitalisation. In addition, China is a major financial market where it is easier to achieve excess returns. We will continue to cultivate our market share in China to provide high-quality services to clients, thereby creating alpha, while sharing the beta generated by the rapid development of Chinese economy.
Investments | What key investment themes shape your bank’s 2021 outlook — and why?
We anticipate that the global economy will enter a phase of resonant recovery in 2021, with further growth in consumption and production. Major overseas economies will probably maintain accommodative monetary and fiscal policies in order to boost economic growth and increase the employment rate.
As for major categories of assets, we are optimistic about commodities benefiting from economic recovery and inflation, followed by stocks as the result of improved earnings. However, the bond market may be constrained to a certain extent.
Investments | What important steps did your bank take to drive the sustainable investing agenda and to increase access to sustainable investing opportunities in 2020?
In compliance with regulatory requirements and market trends, we have vigorously promoted the NAV transformation of products and laid out a multi-layered product system, so as to ensure the diversity of products.
At the same time, we have upheld the philosophy of asset allocation and we are working hard to continuously improve asset allocation methods and provide multiple service models, such as tripartite decision-making and carte blanche, to achieve maintenance and appreciation of client assets.
CMB – special comments on Family Office & Trusts
What are your observations and advice regarding the rise of Family Offices in China?
We see this positive development as an awakening of the demands of China’s extremely high-net-worth population. Different institutions have their own understanding of the family office business and therefore apply different business models. In our view, the family office space is a dynamic sector that not only offers clients abundant choice, but also represents a process of client education.
For institutions, it also brings an opportunity to restart and reshuffle. Looking back at the development of the Chinese private banking market, we expect that the family office business will soon enter an era where the strong will remain strong forever.
How should clients choose the right family office institution in the face of so many choices?
Choosing the right institution is an act — and art — of balance. It is about balance between function and cost, and between supply and demand. Clients can come to a decision from the following two perspectives:
First, they choose an institution that can provide family governance services. The decay of a family business will not be turned around if the institution only cares about allocation and material wealth management.
Second, they should also choose an institution with a powerful platform and deep resources. That said, no one institution will be able to provide all the services that a client needs, which means that it is necessary to work with a number of institutions.
What should the social mission and responsibility of family offices in China be?
Family businesses have become an important part of the Chinese economy. If the elites among them withdraw from the stage due to a failure in inheritance, it would be a major loss for entrepreneurial families, corporate employees, and Chinese economy as a whole.
Therefore, private banks should help Chinese entrepreneurs plan for inheritance and not just offer purely financial management services. Family offices also carry a responsibility to give back to society and promote social development.
Meet 2020’s industry leaders in the full round up of of Asian Private Banker‘s The Final Word 2020.