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?

We have an ongoing investment process that is agile and efficient in terms of the decision-making process. This means the ‘time to market’ is fast and we can implement trades within a short period of time, which is required given the volatile policymaking backdrop that we expect in 2025.

In terms of 2024, we engaged in opportunistic portfolio hedging via options (where applicable) when pricing was advantageous and will look to do so in the future as well. While hedging is not free, foregoing some upside in favour of preserving the bulk of gains is a trade off we think makes sense.

With the US election behind us, we anticipate a pro-cyclical fiscal environment under the incoming administration, with some longer-term upside risk on inflation given still tight labour markets. The caveat here is the likely increase in energy supplies may result in lower headline CPI 12-18 months out, counteracting some or part of the heat in the economy.

Our main near-term concern is the imposition of punitive tariffs on Chinese exports, which will likely have negative repercussions for the rest of Asia given how supply chains are interlinked. Furthermore, the direction of travel of President-elect Trump’s policies points to a strong dollar, which in turn may be a headwind for regional assets.

Q2: 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?

In recent weeks and months, China’s policymakers have made important strides in fiscal, monetary and property market measures that should set a floor on GDP growth over the coming two years. That said, it is uncertain how long it will take for property values to climb meaningfully higher again. We believe more stimuli will follow in 2025, but do not look for material weakness in the renminbi as this would arguably be counterproductive.

Q3: Much hype has been made about the transformative potential of artificial intelligence. What opportunities does AI present to your financial institution, and how does it fit into a broader strategy of technological upgrade and digitisation?

In our view, we can say that LGT is both a client and data-driven organisation. Over time the application of powerful data analytics and AI-enabled tools results in meaningful time saving for our staff, allowing them to focus on clients more. Boosting productivity is key to making more of what we do scalable, and we better reach more clients, faster and with better investment recommendations. This is not hype, but the real application of new technologies is a benefit to both our clients, staff and the bank.

At the same time, we emphasise that the human touch is what makes private banking special. The role of the relationship manager and their proximity to the client does not change as new tooling and data analytics come into the picture. Quite to the contrary, we maintain that the advisory process will be reinforced by the in depth understanding of how clients are positioned in their portfolios.

Q4: With wealth clients being increasingly sophisticated, tech-savvy, and time-conscious, they are demanding more expertise and capabilities when it comes to discretionary portfolio management offerings. How is this reflected in your long-term approach to DPM in Asia and efforts to deepen client penetration of these solutions?

We look at this topic from several angles. First, the investment process of today and of the future must be premised on a deep understanding of market risks in client portfolios. This means that LGT is making sizable investments in the arena of risk management tools. Put succinctly, we need to know what factors are driving the performance of client portfolios and what factors need to be controlled to avoid major drawdowns. Doing so should result in a better client experience over the longer term.

Second, we do regular reviews of our strategic asset allocation (SAA), which is the baseline setting for the asset class weights within our discretionary portfolio offering. These reviews are necessary as market conditions change over time and the risk-reward characteristics of underlying assets also change. In other words, nothing is static in finance and new opportunities and risks emerge all the time. By enhancing the baseline SAA with more private market solutions, for example, we aim to smooth out the volatility of client portfolios while not sacrificing returns.