Q1: Private banks in Asia have faced a number of challenges in 2024, from uncertainty around interest rate cuts in the US to volatile markets and geopolitical tensions. Considering this background, how did you safeguard AUM and revenue streams in 2024, while also attracting net new assets? What will your strategy be in 2025?

Bank of China (Hong Kong) Private Banking has long recognised that volatility and risk are inherent to the market. As such, we have adopted a diversified approach to asset allocation, encompassing not only a balanced mix of asset classes but also geographical and currency diversification. By prudently managing risk exposure across different regions and markets, we are able to mitigate the impact of external factors, such as interest rate changes and geopolitical instability. In addition, we monitor leverage ratios closely to ensure they are in line with our clients’ risk appetite and long-term financial goals.

In 2024, our diversified approach has been proven to be sustainable in the long term. As of October, the number of clients has recorded a stable year-on-year growth. Notably, clients from the Chinese mainland and Southeast Asia now account for nearly 30% of the total client base, demonstrating the significant potential of the business. This strategy not only helped to protect our clients’ portfolios during times of market volatility but also provided a solid foundation for attracting new assets. Our clients value this risk-conscious yet flexible approach, which allows them to respond to changing market conditions while still positioning their investments for growth. Furthermore, we continue to strengthen our client relationships and tailor our offerings to meet the evolving needs of high net worth individuals, particularly in the context of the Greater Bay Area’s growing market.

Looking ahead to 2025, we plan to further refine our strategy by recommending a reduction in cash holdings, given the improving market outlook and potential for higher returns in risk assets. While ensuring that all strategies are in line with clients’ long-term objectives and risk profiles, we will continue to leverage our international expertise and strong network within the group to offer our clients access to a wider range of investment opportunities and bespoke wealth management solutions.

Q2: How are you advising clients in terms of investment opportunities in 2025? Which markets and asset classes will provide the best opportunities? And how can clients balance leveraging these opportunities while managing risks to their portfolios?

In advising clients on investment opportunities for 2025, we focus on constructing well-balanced portfolios that provide exposure to attractive growth opportunities, while also managing potential risks in an ever-evolving market landscape. Our approach to asset allocation for 2025 is grounded in diversification, aiming to capture the upside potential of various asset classes while mitigating downside risk through careful selection of investments.

We proposed a slightly conservative approach versus last year in view of event risk and the interest rate cutting cycle and thus we recommend 40% each in bond and equity this year, while 20% in cash/alternative investments such as gold. This balanced allocation allows for liquidity, stability, and growth potential, catering to both clients with a conservative risk appetite and those seeking higher returns.

For equities, we continue to favour markets with strong growth prospects and structural resilience. Japan, India, and the United States remain key focus areas, as these markets offer favourable economic fundamentals and strong corporate earnings growth potential. The US market, despite volatility, is expected to continue benefiting from technological advancements and a relatively resilient economy. Within Asia, we find the Hong Kong and A-share markets to be particularly attractive. The ongoing economic recovery and government policies aimed at stimulating growth present significant opportunities, particularly for long-term investors.

On the fixed-income side, we recommend a focus on US Treasuries. The US Federal Reserve kicked off the rate-cutting cycle, which provides an opportunity to benefit from bond price appreciation. Furthermore, they provide a degree of stability to balance the more volatile elements of an equity-heavy portfolio.

In terms of managing risk, it is essential to balance the pursuit of higher returns with prudent risk management strategies. While leveraging equity markets offers growth potential, it is important to consider the risk of market volatility, especially in the context of global economic uncertainties. This is where our emphasis on a diversified asset allocation becomes crucial. By including cash and gold, we provide liquidity and a store of value, which can act as a buffer in times of market stress. Gold, in particular, is a valuable hedge against inflation and geopolitical risk, adding another layer of protection to the portfolio.

By staying diversified and having a clear risk management framework, clients can maximise the opportunity of capturing the upside potential of the markets while mitigating risks associated with overexposure to any single asset class or region.

Q3: China’s announcement in 2024 of a series of monetary and fiscal stimulus measures has helped re-energise the world’s second-largest economy, bringing optimism and momentum to the market. What opportunities has this created for your bank? How would you advise clients when it comes to investing in China?

The announcement of a series of monetary and fiscal stimulus measures in 2024 has certainly revitalised the economy in the Chinese mainland, infusing optimism into the markets and creating significant investment opportunities.

One key factor that will drive opportunities is the falling interest rates which is likely to benefit the Yuan (CNH), which in turn could lead to positive valuation adjustments for Chinese assets. A stable CNH will enhance the competitiveness of exports and improve the profitability of enterprises in the Chinese mainland, which is expected to support earnings growth for many companies. As a result, we are seeing an environment where valuations of Chinese equities may become more attractive, especially for investors looking for growth in emerging markets.

From an investment strategy perspective, we are particularly focused on sectors that offer both stability and growth potential. Our preference is for value stocks in sectors such as telecommunications, financials, and energy, which are poised to benefit from the central government’s stimulus measures and the overall economic recovery. Their attractive valuations make them compelling investments for clients seeking both income and capital appreciation.

When advising clients on investing in China, we emphasise the importance of a balanced and strategic approach. We encourage clients to adopt a long-term investment horizon. By focusing on high-quality, value-oriented investments and maintaining a diversified portfolio, clients can position themselves to benefit from the structural growth drivers in China’s economic momentum.

Q4: In 2024, the private banking industry witnessed organisational restructurings, leadership reshuffles, as well as heavyweight departures. Looking forward, what are the priorities for your private bank in terms of attracting and retaining talent across the front, middle, and back office? What measures do you have in place for managing personnel transitions?

BOCHK Private Banking adopts a people-centred approach to recruiting and developing wealth management talent through comprehensive measures including selection, training, development, and retention. Given the large number of high net worth clients in the Greater Bay Area and Southeast Asia with the increasing demand for private banking services, we are committed to expanding our team. We will recruit top talents from Hong Kong, the Chinese mainland, Southeast Asia, and other overseas regions to further strengthen our professional team of relationship managers. Additionally, we will enhance our middle-office and back-office teams to improve service quality and market competitiveness, ensuring we meet the diverse needs of clients from various cultural backgrounds and regions.