Family offices in the Asia-Pacific region that manage wealth for high net-worth individuals cut back their asset allocations to Greater China last year, deterred by policy uncertainties and rising geopolitical concerns, a UBS report said.
A survey of 45 single family offices in APAC, part of a global survey, showed that allocations to Greater China fell to 23% in 2022, from 40% in 2021.
Only 15% of APAC respondents plan to increase investment in the Greater China region in the next five years, the survey found.
Among global respondents overall, a slightly larger 22% plan to raise investment, although their allocation to Greater China was only 7% in 2022, down from 9% the year before.
Respondents were more bullish on the APAC region excluding China, with 31% of both APAC and global respondents planning to boost investment there.
LH Koh, co-head of global family and institutional wealth APAC at UBS Global Wealth Management, said investors shied away from China mainly due to policy uncertainties last year that affected its property, education and tech sectors.
Geopolitical risks remain a top concern among investors, where tensions are rising with the United States over technology and trade issues, but Koh said some foresee opportunities emerging after China eased COVID 19-related restrictions.
“In more recent conversations with clients, we are seeing appetite coming back as China reopened,” he said, also noting rising concerns about a possible U.S. recession.
Among asset classes, family offices in Asia-Pacific had the highest allocation to equities, with the lion’s share tied to developed markets, according to the survey, conducted from January to March and covering 230 single family offices worldwide, with average net worth of $2.2 billion.
Almost half of APAC respondents used hedge funds to diversify, compared with one-third of family offices globally.
Reuters