Celebrity Life

Will luxury timepieces ever be a viable investment category and why are prices for some models exploding? To answer these questions and discuss investing in watches, we turn to the experts: Eric Ku, veteran watch dealer and the founder of new auction company Loupe This, Austen Chu, founder of pre-owned watch specialist company Wristcheck, Thomas Perazzi, head of watches at Phillips Asia; Sam Hines, worldwide head of Sotheby’s Watches, and Alexandre Bigler, vice president and head of watches at Christie’s Asia.

How do you explain the explosion of prices of watches at auction and on the secondary market?

Eric Ku: Many factors are contributing to the explosion of prices on the secondary market and its rise to prominence. Firstly, many coveted watches simply aren’t available on the primary market – steel sports-model Rolexes have always been hard to get, but now even a gold Day-Date or plain steel Datejusts are hard to find. Rather than waiting for “the call” from a primary dealer, many of people have elected to go to the secondary market and pay a premium price for something and not have to wait. Secondly, with Covid and the associated lockdowns of the past 15 months, people have become a lot more comfortable buying from home, even when it involves something expensive like a watch. While authorised dealers have to deal with a lot of red tape as to how they can sell things, secondary-market dealers have no such problems. Thirdly, with a lot of time on everyone’s hands during the lockdown, many people at home have been surfing the internet looking for things to buy, and what better than a new watch?

Austen Chu: I can probably talk about this for hours on end, but let me try to sum it up in a few sentences. I think the recent explosion in market prices for watches is an amalgamation of many factors, which include the introduction of social media (people tend to forget that social media is only about a decade old), the influence of watches in pop culture (50 years ago, singers weren’t bragging about the watches they were wearing in their songs), and access to information/tools that previously weren’t available to previous generations. None of this existed decades ago, and in my opinion, it’s just the beginning.

Thomas Perazzi: There’s a strong growth in collectors of vintage timepieces, who’ve acquired modern pieces in the past and have decided to experiment with vintage. The way we communicate is very different from 10 to 15 years ago. The main way to follow an auction 20 years ago was to be physically in the saleroom, but now through social media and the internet, vintage timepieces are being represented and talked about on a daily basis, with experts from the industry and collectors passing their passion and knowledge to the next generation. There are many new players joining the watch-collecting market every year and this will continue to grow, especially with the digital transformation.

Alexandre Bigler: I’d say that the exceptional results and prices achieved at our auction reflect supply and demand in the current market. Unique pieces with impeccable provenance (for example, the Patek Philippe Alan Banbery 3448J and FP Journe Chronometre Souverain, made specially for Dr George Daniels) and vintage timepieces, particularly from Patek Philippe and Rolex, attracted deep bidding, as their supply was extremely low. Another reason we witnessed is an influx of new and emerging collectors, who learn fast and are very responsive to market trends. Their growing appetite, in particular for fast-rising brands at auction like Audemars Piauet, Breguet and A Lange & Söhne, also pushed the high prices achieved at our auction this spring.

Has Covid had an impact on the way people are spending and collecting, or do you credit other factors as well?

EK: It absolutely has. I’ve explained some of the ways above. Other factors play a part too, with brands generally becoming more nimble and focusing on what customers want, and focusing on new ways to engage with collectors. With limited opportunities for in-person gatherings, brands had to pivot their outreach strategies to get customers interested in their offerings.

TP: The pandemic has given people more time to ponder and restructure their collections, resulting in the availability of pieces that rarely hit the market. The pandemic has also given watch lovers more time to research and go deep into what they collect and build deeper knowledge in timepieces. The secondary watch market is stronger than ever – our phenomenal results at Phillips since 2020 prove that the pandemic hasn’t cooled consumer demand for mint-condition horological rarities that came to auctions.

Sam Hines: I also think a lot of our clients prefer to have tangible assets instead of money right now, given the economic outlook. At the same time, some people wish to sell their assets in exchange for cash. In general, prices all over are strong but it’s true for watches in particular. I think we reached a lot of new clients with our smaller online sales and made our sales more accessible and, to be honest, bidding in auctions can be addictive.

AB: I think collectors have become comfortable and receptive to buying online, as the pandemic drives almost every brand – including, of course, Christie’s – to expand and enhance digital footprints over the past year, which further helps educate trade and individual clients to buy in retail stores and at auction. The rise and rapid expansion of social media e. has also promoted tech-savvy collectors’ purchases online.

AC: Yes, tremendously. For watch collectors and people with a higher disposable income, this also meant that their expenses fell dramatically (no more family summer holidays etc). This, coupled with endless hours browsing the internet, leads people to spend more on watches that they would’ve in the past and fuelled the frenzy we’re seeing now. Watch collecting is addictive – once you start, it’s quite hard to stop!

Is it a bubble that you expect will burst and will prices readjust themselves in the next few years? Or is what we’re seeing going to be the new standard?

EK: By nature I’m a glass-half-empty guy, and have been waiting for the prices to tumble, but it seems as if I may be wrong on this one. The market itself is getting bigger and bigger, at an almost exponential pace. With so much (new) interest being placed on watches – both new and pre-owned – I don’t see a collapse coming soon. Does that mean that the Nautilus won’t come down in price? No – there are some outrageously frothy segments of the market – but I think the general macro trends are very strong and will continue to be so.

TP: Of course not. I’ve been seeing the growth of interest in watch collecting for more than a decade. There are many new players joining the watch-collecting market every year and I think this will continue to grow – especially with the digital transformation, the watch market has become even larger. For example, our recent Hong Kong Watches sale had a record number of online participants, the highest ever in Phillips Asia’s company history. Phillips Watches also ended its first half of 2021 selling every single watch offered across our sales globally. Watches that aren’t having much commercial success today may be sought-after by collectors in the future. For example, the Patek Philippe Ref 2523, which sold for more than 7 million Swiss francs at our Geneva Watch Auction in May – it would seem that the elaborate and refined aesthetics that make the timepiece so iconic and attractive nowadays, were too ahead of their time at the time of its release. The Ref 2523 wasn’t especially welcomed by Patek Philippe clients and consequently production was very limited. A slightly modified version, the Ref 2523/1, was also launched but with a largely similar response.

SH: Prices should level off and will stop increasing at such rates. The demand easily outweighs the supply, so for now I believe this is the new norm.

AB: First of all, the annual production by legendary brands and even independent watchmakers was always very limited even before the pandemic. The demand for their timepieces will naturally be stable and strong. Secondly, the pandemic might have forced some brands temporarily to shut down their factories, but collectors respond very fast and will shift their focus to vintage designs, before the modern complications come to the market again. The market responds and evolves naturally. Thirdly, watches is a very interesting and unique category – in general, watch collectors invest a lot of of time and effort in researching the market before making a purchase. They seldom buy hot-headed or simply to resell the next day. And lastly, exceptional, rare, unique, limited-edition timepieces always stand the test of time; they’re rarely a fad in the market.

AC: People tend to forget that the watch industry as a whole is so much more than the brands that are in demand – such as AP, Patek, Rolex, RM, FP Journe – when it comes to diversity and product offerings. There are so many fantastic brands out there that give you a ton of value for the money. However, with the current market trends, it seems that these brands will continue to be strong, and that’s simply because of supply and demand. There’s this huge influx of next-gen collectors who can’t get anything at retail. The luxury watch industry was historically meant to be “exclusive”, in the sense that manufactures can’t produce high quantities due to the skilled labour required to make these beautiful watches. The paradigm shift occurred when information stopped becoming exclusive, because of the internet, social media etc, but the watch manufactures themselves still remain exclusive in terms of production. As long as people want to buy luxury watches that are hard to acquire, I believe this trend will continue. However, this also offers many opportunities for other brands, and I believe the next wave will be in other independent brands.

When tracking the trends for certain pieces, what are you seeing?

SH: The stainless-steel sports watches made by Patek Philippe and Rolex. No one can get them, everyone wants them and multiple models are trading at three, four or even five times the retail prices. A Patek Philippe Ref 1436 was sold at more than HK$5.25 million in our 2020 Hong Kong October sale. Eight years ago, that watch sold for less than half that price. There’s also a huge demand for watches manufactured by independent brands in very limited numbers. Of all brands, the one that’s increased at ground-breaking rates is FP Journe – some models have increased by 400 percent in one year. It’s the most fashionable brand now and market prices typically increase when they’re in vogue and talked about the most. An FP Journe Chronomètre à Résonance, circa 2002 with power-reserve indication and brass movement, realised 239,400 Swiss francs (US$261,386) in Geneva in November, against an estimated US$55,000-$110,000.

TP: I’d say that there’s is a huge growth of interest in independent watchmakers, such as FP Journe, De Bethune, Roger Smith and Philippe Dufour. And the Audemars Piguet Royal Oak is also very popular among Asian buyers.

Has the market become more of an investment platform than a passion or hobby?

EK: I tell all my customers that there are plenty of better things to invest your money in, and that watches should primarily be an investment in your passion and pleasure. That being said, it’s difficult to ignore the dollars and cents of it all when prices are so high and some guys are seeing their steel Daytonas, which they bought at retail for US$12,000, go for nearly triple that on the secondary market. What ultimately will be detrimental to the market is when a majority of buyers and collectors are doing so for financial profit and not for pleasure and passion.

SH: As the prices have increased so much in the last few years, for sure collectors look at their purchases as investments too. However, our advice to collectors is always to buy the very best watch they’re genuinely passionate about and that their budget can afford. Buying purely from the investment perspective doesn’t guarantee a good re-sale price.

AB: I’d say it’s a mixture of both, but Christie’s always encourages clients to buy for passion as watches aren’t just assets that hold monetary value, but are also are wearable art that carry craftsmanship, science, humanity and personal stories, which can be passed along the generations.

AC: We’re seeing a mixture of people coming into the watch space, and a lot of young people do view certain luxury watches as an alternative way to store their wealth, so for a certain portion of the new generation it’s become somewhat of an investment, but alongside their hobby of watch collecting. On the other hand, we’re seeing more and more young watch collectors who buy purely for passion and don’t care about the market. I think it’s a fairly large mixture, and I don’t think they’re mutually exclusive. A lot of young collectors are also getting into the space of watches for social status. Watches have never been this culturally cool or as culturally relevant, ever. There’s nothing wrong with buying a watch you love that also happens to go up in price over time, but you should be passionate first. I don’t think it’s smart for someone to come into the watch space with a purely opportunistic mindset.

Will steel sports watches have this hold on the market forever, or are there other pieces that you yourself, or other clients, are starting to shift their focus to?

EK: As a lover of all watches, I encourage my customers to collect what they like, even if it isn’t steel sports watches. I think when looked at even under a magnifying glass, all segments of the market have increased in value and price over the last several years. I definitely don’t advocate that people go and pay market price for a 5711 Nautilus and then expect to sell it at a profit. They should be buying it at that price because they just can’t live without it.

Do you see any pieces on that are on the rise? Are there specific pieces you’re curating that are in high demand?

AC: Yes, for sure. For Wristcheck, the majority of our clients are young (under 35), and the trends are very predictable. They mainly only want independent brands such as hot APs and hot Pateks – and, surprisingly, smaller independent brands such as Richard Mille, MB&F, H Moser and De Bethune. I find it really interesting that not many of them are asking for brands that we expected, such as Rolex (of course we sell Rolex, but not as many as we anticipated). We tend to curate discontinued models that hold historical significance but tend to be overlooked by the market, though it’s clear which brands are doing well.

(Hero Image: the Patek Philippe Ref. 2523 sold at the Phillips Geneva Watch Auction: Xiii in May for 7 million Swiss Francs)

The post Investing in Watches: 5 Experts on Everything You Need to Know appeared first on Prestige Online - Hong Kong.

Young, ambitious, educated and wealthy, a new generation of art collectors is taking the art world by storm.

Snapping up more works than ever before, a new and sharp-eyed generation of buyers is taking risks on emerging names and investing heavily in blue-chip artists. Beyond potential financial gains, these ambitious, educated and wealthy young people are also drawn to the prospect of joining the exclusive club that is the art world.
“The growth has just been phenomenal,” says Charlotte Raybaud, head of evening sale, 20th-century and contemporary art at Phillips Hong Kong, of the number of young art aficionados entering the market. “It’s also undeniable that art has become a very valuable alternative investment. While you should always collect [based on] your passion, it’s hard to not pay attention to the big prices that are being achieved at auction and in galleries.”

Today, young collectors aren’t just buying more art but they’re also willing to shell out more than any other demographic. According to UBS and Art Basel’s 2020 global art market report, among the high-net-worth individuals surveyed, millennials – defined at being under the age of 38 – spent six times more on art than collectors above the age of 55 in the past two years. Compared to older collectors, millennials were also more optimistic about art as an investment and were more likely to sell works from their collection compared with older collectors.

A recent report titled The Next Gen Art Collectors 2021 by art-market data company Larry’s List echoed this sentiment. It highlighted the fact that young collectors, who they define as being largely under the age of 40, like keep their collections “dynamic” through upgrading, rebuilding and refocusing. While collectors reselling artwork is common, their research discovered that young buyers’ activities are now more transparent than before.

Among the list of leading young art patrons profiled in the report is Ning Chong, co-founder of The Culture Story, a boutique art space and advisory based in Singapore. Like many young collectors, she comes from a family of art patrons. Her father, former stockbroker Chong Huai Seng, began buying art in the 1980s. Today, the family collection of more than 300 works includes major street artists such as Futura, Jason Revok and Timothy Curtis, as well as Singaporean names like Jahan Loh and Wong Keen. “We buy art because we love it, but at the same time you have to know what you’re acquiring, so we do have one eye on future prospects,” says Chong. “Buying art can be tricky. The timing matters and you need to have some insider knowledge of what’s going on.”

In recent years, Chong has observed an increasing number of newcomers entering the art market for various reasons. “Today,” she says, “even if you’re not into art, you can get pulled into it, either by your peers or your own curiosity. Or maybe your favourite fashion brand is involved in art so you follow its activities. Social media also obviously plays up the appeal of art as a potential alternative asset class to grow your wealth.”
Many collectors are investing in a lifestyle that’s associated with being part of the art world. “There is a rise in collectors wanting the whole package,” says Raybaud. “You want to have the designer furniture at home, the watch on your wrist and the beautiful paintings. Even if there isn’t necessarily a monetary gain, then at least there’s an aesthetic gain where collectors can live with very beautiful works.”

Another upside of investing in art is the social aspect of a field in which you can form relationships with artists, join museum groups or support foundations, all of which can be important aspects of the collecting journey for many young buyers. This is one of the factors that makes it more appealing than other assets, such as stocks or real estate. “It offers a very big social benefit. You can go to art fairs and openings and do studio visits with artists,” says Chong. “You meet different types of collectors and exchange stories on art they regret buying, what they love or what they’ve chased down. This is all part of what makes the community tick.”Getting to know artists is particularly important to some collectors, such as Shanyan Koder, founder and director of the private art advisory Shanyan Koder Fine Arts and founder of the online art platform HUA, which showcases Chinese contemporary art. “I think it's so important to understand the story behind any artwork,” says Koder. “So, if you meet the artist, you meet the creator of the artwork in the flesh and it brings the entire artwork to life. You understand the context in which it’s created and the history of the person. It creates a bond.”

The daughter of Canning Fok, group managing director of Li Ka-shing’s Hutchison Whampoa conglomerate, Koder grew up surrounded by art. Her family’s collection includes masterpieces by the likes of Monet, Picasso, Renoir, Dali and Warhol, as well as Chinese modern masters such as Sanyu. Her own personal collection focuses more on established contemporary names including Damien Hirst, Tracey Emin and London design duo Patrik Fredrikson and Ian Stallard, as well as contemporary Chinese artist Zhuang Hong Yi.Currently, she’s eying NFT-backed digital art to add to her collection. Her platform Hua is also collaborating with art consultancy Crysalis to release a new collection of digital works by Gao Brothers and make NFTs available.

“This has everything to do with the evolution of the art world into the digital age. I love the concept, I think it’s forward thinking,” says Koder, explaining that NFTs appeal to both young and seasoned collectors. Today as galleries launch NFT trading platforms and auction houses are live-streaming major sales, the art world is increasingly shifting online, making art a more appealing investment for digital-savvy young collectors. They no longer have to venture into austere white-cube galleries or old-style auction sale rooms and can instead purchase art at the click of a button.,“Art isn’t as exclusive as it was in the past,” says Koder. “Now, it can be viewed on social media – everyone’s sending images across WhatsApp and WeChat, so it’s much more accessible. That’s given the young generation an opportunity to go in and participate.”

Along with embracing technology, auction houses are finding creative new ways to reach a younger demographic. Many auction houses are partnering with celebrities and brands. Sotheby’s, for instance, has previously collaborated with Highsnobiety, the digital platform focused on streetwear, and Christie’s has partnered with Supreme. Last month, Sotheby’s linked up with Mando-pop megastar Jay Chou, a major influencer with more than 6.4 million followers on Instagram, who curated its inaugural Contemporary Curated: Asia sale. The auction featured notable brand-name artists, including Jean-Michel Basquiat, Gerhard Richter, Yoshitomo Nara and Yayoi Kusama, alongside in-demand younger talents like American painter Loie Hollowell and Japanese artist Yukimasa Ida. More than 25 percent of buyers at the evening sale were aged 40 or below. According to Sotheby’s social media played a large role in marketing the sale, which was also live-streamed on Jay Chou’s Kuaishou account and attracted some 18 million views.

It isn’t just auction houses that are harnessing the power of social media. “We have a huge increase in museum shows and gallery shows, which are becoming more and more prevalent on social media,” says Raybaud, who explains that this can inform young collectors acquisitions. The Art Basel market report also noted that many millennial buyers use Instagram, for instance, as part of their collecting process. According to the Larry’s List report, a number of artists that appeal to millennial collectors are themselves active on social media.

It’s also no surprise that young collectors are often drawn to artists from their own generation. Young collectors pay a huge amount of attention to museum shows, adds Raybaud, giving the example of two young artists who fared well at Phillips’ recent spring sales: Loie Hollowell, who’s currently exhibiting in the Long Museum in Shanghai, and Indian figurative painter Salman Toor, who showed at the Whitney Museum of American Art in New York earlier this year. Both garnered a great deal of interest and set new records. At the upper end of the market, Raybaud says that if younger collectors lack the budget to take home major works by big names like Yoshitomo Nara, for example, whose paintings can sell for millions, they may chose a more affordable work by the same artist.

As the landscape of the art world continues to transform, young collectors are poised to become an even more powerful force in the market. While Koder describes herself as a “romantic” who isn’t buying for investment, she nonetheless says, “There are opportunities for growth as in any asset class. I think one of the most interesting things about art is that most artworks are unique (unless you’re buying in additions or prints), so you just need more than one interested buyer for the price to go up, so to speak … The potential is only on the upside.”

(Hero Image: The street artist Futura, with works from Constellation at the Culture Story)

The post Brave New World: Meet the New Generation of Art Collectors appeared first on Prestige Online - Hong Kong.

With volatility across traditional financial markets, whisky investing is on the rise. But, we ponder, is this a case of liquid or fool’s gold?

They call it “liquid gold” – and as an investment, whisky is starting to live up to the name. Last May, at Bonhams Fine and Rare auction in Hong Kong, two bottles of The Macallan 1926 sold in separate lots to different bidders for more than US$1 million each, breaking world records for the spirit set just a month before.

It was yet another sign of the growing prominence of whisky investing, an asset that, on paper at least, has seen dramatic gains. Over the past decade, rare whiskies have appreciated by 580 percent, outpacing the stock market and most commodities, according to Knight Frank’s 2020 Wealth Report. And even on a more conservative scale, Rare Whisky 101’s Apex Index of best performing bottles, measured 7 percent annual returns over the last few years.

“Whisky is a very unique asset class – it’s what we get asked about most – there’s nothing that compares to it,” says Andrew Shirley, Knight Frank’s Wealth Report Editor. “It’s long established, but has only recently had huge momentum around it. Wine has new vintages every year, but that’s not the same for very rare whiskies – you’ve got this finite supply, which is why it’s such an interesting thing to collect.”

That new-found interest in rare whiskies is largely being driven by millennial investors from Asia, the Covid pandemic seeing sales swell as they seek investments that play double-duty to drown their sorrows. Stocks and bonds are their safe havens, and dramatic auction-house increases in art, wine and vintage cars have them feeling priced-out – but whisky is an affordable asset with the possibility of massive returns, all driven by passion.

“We’re seeing younger collectors come into market, who are falling in love with the spirit; it's a passionate investment, as we know: the legacy, the chemistry, the skill, the talent,” says Andy Simpson, co-founder of the Rare Whisky 101 consultancy. “Some are going to open the bottles, and so fewer are left in the market, making it more scarce and harder to collect from an investment perspective, so values are always increasing.”

History, heritage and societal prestige; a stable physical asset that’s less complicated or costly than its established counterparts, easily bought in bottles or purchased through a fund – and with the added “cool” factor for all-important bragging rights. But, as with any investment, it’s not without its perils or pitfalls.

“The great thing about whisky is it’s accessible, you can start from as little as a few hundred dollars, all the way to seven figures,” says Daniel Lam, Bonhams’ Director of Wine & Spirits. “Prices are rising every day, blue chips are getting more expensive, but there’s a lot of potential in the market and you need to do your homework, because things change monthly.”

Getting into its world is as simple as buying a few rare bottles at auction and storing them at home, with Scottish and Japanese whiskies generally the “blue chips” of its class and Irish, Indian, Australian and the US “emerging markets”. But gains aren’t always guaranteed, and research and at least a little interest are considered essential.

“More than 99 percent of all whiskies will not appreciate in value over time,” says Joseph V Micallef, independent whisky expert and author of Scotch Whisky: Its History, Production and Appreciation. “You need to rely on experts, with knowledge of the whisky market, to identify those that have the potential to appreciate.”

If return on investment is your end goal (as it should be), rather than a superficial personal collection, whisky funds are starting to be seen as reliable. Much in the way that an index fund holds a basket of stocks with secure potential, whisky funds give investors access to experts who seek financial value through quality, balancing blue-chip and emerging-market bottles set to appreciate, before paying out after a number of years.

“A good fund invests in whisky, the liquid itself, the golden drops,” says Christian Svantesson, CEO of The Single Malt Fund, which is regulated by the EU as an alternate investment. "It’s a two-fold strategy to invest in whisky: we pick distilleries using our expertise, but whisky also isn’t a commodity – it's a consumer good, so as part of the industry, we invest below market price at a trade discount, so it appreciates from day one.”

Government regulation, as in The Single Malt Fund’s case, is rare in the market, but it’s becoming a growing symbol of reliability, and similarly regulated funds can now be found in tax-friendly regimes such as Hong Kong and Singapore.

The great thing about whisky is that it’s accessible, you can start from as little as a hundred dollars”

Daniel Lam, Bonhams

But for better or worse, whisky investing is still in its early stages, with only a decade of reliable data to source from. Due diligence is imperative, losses are to be expected and fraud is sometimes prevalent, with overpriced bottles at one end of the spectrum, fake goods in the middle, and labyrinthine confidence schemes on the other.

“Macallan, which has historically been the number-one investment whisky, has actually depreciated according to the RW101 index, so that can happen,” says Svantesson. “And while the whisky industry is quite tightly controlled and fakes aren’t as common as in the fragmented wine industry, you can still be unlucky if you don't know what you're doing.”

Experience is, of course, highly coveted, but common sense is also undervalued. Over the past five years, cask investments have been hyped as the next wave of whisky investment, in which speculators buy into the liquid maturing in oak barrels, before it can even legally be called “whisky”. A broad Google search for “whisky investing” frontloads with numerous ads and targeted articles for casks, with almost unheard-of 20-percent-guaranteed annual returns.

“I strongly suspect there’s fraud emerging in the cask-investment market, a classic Ponzi scam with multiple selling,” says Simpson. “Companies are selling casks on a certificate basis and it’s nonsense – I could give another hundred people the same certificate of title, and I could multiple-sell that cask. There’s a very distinct way that things need to be traded in the whisky industry and that’s not being done.”

Owning an entire cask can seem alluring, especially with advertised prices for as little as US$1,000, but experts say basic verifications such as sampling the whisky, getting accurate measurements of bottles you’ll receive and tracking paper trails such as delivery orders and unique cask numbers are vital before any transaction takes place.

Despite whisky’s recent track record, it’s hard to predict the asset’s future as a stable investment. Mass speculation on the higher-end of the spectrum is a particular concern, with fears of a possible bubble emerging, though many say there’s little to worry about, especially if you’re aiming long-term.

“There’s a new-discovery distillery in nearly every country of the world at the moment, and that globalisation of whisky is only going to drive demand for older, rarer whiskies,” says Shirley. “Certainly as an asset class it will continue to remain popular – we’re not sure how that will be reflected in prices, but it’s not bubble territory like we saw in fine-wine assets.”

Indeed, wine offers a clue through lessons learned: mass speculation in Bordeaux vintages eventually caused a market crash, but that saw increased interest in Burgundy. Similarly, as blue-chip Scotches decline, rare Japanese whiskies are steadily rising, especially as distilleries discontinue age-statement whiskies (Suntory’s Hibiki 12 and 17 are most renowned, but even previously entry-level Hakushu and Yamazaki 10 now sell for 10 times their original retail price).

Other countries to keep an eye on, according to Svantesson, include Ireland (“the birthplace of whisky”), Australia and Taiwan. And for investors wanting to take a punt, now is as good a time as any, with affordable bottles seeing the greatest returns. “What’s fascinating is significant increases at the lower-end of the market, between US$500 to US$2,000 per bottle, with a lot of stress and significant decreases above US$5,000,” says Simpson. “That’s a result of Covid – people are being more cautious. They’re not willing to spend US$10,000 on one bottle, when you can buy 10 bottles and democratise the risk across different distilleries.”

With Covid still creating uncertainty and cries of bubbles in everything from global equities to housing, the majority might be bullish – but even if the asset does suffer a crash, as Micallef says: “Worst case, you can always drink your investment.”

The post The Growing Prominence of Whisky Investing appeared first on Prestige Online - Hong Kong.

Asian private banks, wealth managers and their clients have probably never faced stronger challenges to their portfolios and their investment relationships.

New forces are shaping the future of investing, private banking and how clients will be served. Financial markets and economies are just emerging from a global pandemic and unprecedented market volatility.

Citi Private Bank draws from its long international experience and network to help clients achieve long-term growth. Asia is a high-growth economic region where wealth creation continues to accelerate. It represents a major business opportunity for both banks and clients to generate returns and manage wealth.

“Ultimately, we’re in the business of trust, where the professionals should be as trusted as the client’s family members,” explains Horace Yip, Citi Private Bank managing director and global market manager for Hong Kong. “Only long-standing private banks can accomplish this.”

When it comes to investment decisions, Asian investors are inclined to demand some sort of active role or reserve a section of a portfolio for their own trades. Beating the markets and keeping up with other successful Asian businessmen – even in volatile markets – are unavoidable short-term client imperatives. However, Citi Private Bank seeks a deeper and more profound investment relationship with its clients.

“Citi Private Bank accompanies and advises clients on their wealth-building and -management journey,” says Yip. “Wealth-management accounts start from US$1.5 million. We see it as a journey going up a wealth escalator. It’s also a journey that mirrors the emergence and rise of the middle class witnessed throughout Asia.”

Both individuals and institutions display their own unique advantages and disadvantages in today’s volatile markets that are heavily influenced by an uneven pandemic recovery and central-bank interventions across economies.

Citi is optimistic about the scale and growth potential of the Asia-Pacific wealth market. So far this year, it hired close to 650 wealth professionals in the region, including more than 130 relationship managers (RMs) and private bankers (PBs) to support client-led growth.

In the first quarter of 2021, Citi added more than US$5 billion in net new funds, representing one of the strongest quarters for the bank on record. The hiring is part of plans to add an extra 2,300 wealth staff, including 1,100 RMs and PBs to support clients, and grow client assets by US$150 billion by 2025.

“Hong Kong is a wealth-management and financial hub for Asia and China’s Greater Bay Area. Our research is covering more ‘A’-share companies in response to demand,” says Yip.

Daniel L Chan, managing director and head of Citi Investment Management Asia, emphasises the importance of establishing and maintaining a core section of the overall portfolio for long-term investments. Determining a client’s appropriate asset mix is an important exercise in carefully blending different investments to obtain targeted results. Risk becomes an important consideration and it possesses many dimensions for the individual.

“We work hard with clients to help them understand and educate them on the importance of a core portfolio – a long-term portfolio of key investments,” says Chan.

Some clients prefer to make their own decisions (active investing), using their bankers to access world markets and an enormous variety of asset classes. Others simply delegate the management of their investments to the bank’s asset managers (discretionary investing).

Whatever their style preferences, Chan observes, “clients have been grateful to hold on to core portfolios through pandemic volatility. It also demonstrates the benefits of a disciplined long-term investment strategy. Our wealth managers have been able to generate a 12 per cent per annum return on a 50/50 equity and fixed-income portfolio.”

One example of how the financial education journey can begin is illustrated by a Hong Kong family whose main business is manufacturing in China. The first natural and comfortable preference is to invest in China equities. Over time, the core portfolio includes global equities and fixed-income strategies.

“It’s an evolving learning process that can take six years,” says Chan. “Last March, during the worst market volatility, instead of calling to liquidate, this family asked if they should add to the core portfolio. At that point, we knew the education journey had borne fruit. Their core portfolio ended last year with a return of more than 20 per cent.”

“Today’s Asian clients display sophistication over a wide spectrum of investment techniques and asset classes,” observes Yip. “And the progression of family offices has been fast over the last five years.”

Whether or not clients use discretionary investment services, they should conduct regular reviews of their strategy and performance with their private banker and stay up to date with regular reports.

“Citi has established a wide investment platform with local, regional and global products and services. Our private bankers, along with our investment counsellors, provide highly tailored advice, as well as a regular flow of investment ideas to support client decision-making,” says Yip.

Most Asian high-net-worth (HNW) customers have more than three wealth management relationships and increasingly demand a relationship manager who understands their business and family needs. As the Asian HNW sector matures, demand is increasing for more sophisticated investment products and services. And the future of private banking services will be determined by investors’ behaviour – healthy or unhealthy, rational or irrational.

“Hong Kong clients from the 1980s and ’90s primarily relied on equities to grow wealth,” says Chan. “Today’s new clients are more focused on capturing the new investment cycle.”

He points out that one big difference is the interest in the wide scope of alternative assets. The recent multi-billion-dollar mainland technology listings on the Hong Kong Stock Exchange have sparked interest in venture-capital and private-equity early-stage investments. Citi Private Bank is prepared to address this new trend.

Chan points out, “Private-equity, alternative assets have proven to be a reliable source of non-correlating diversification that should be part of a core portfolio. We’re able to offer asset managers who are independent of Citi.”

Citi Private Bank’s global capabilities are especially valuable to entrepreneurs or cash-rich investors who seek investment opportunities in down or volatile markets. Private equity has emerged as an asset class that’s generating more interest, despite its broad management challenges.

Sustainability is also built into Citi Private Bank’s philosophy and capability. Investment funds, clients and corporations are increasingly demanding high environmental, social and governance (ESG) standards. The bank offers a wide range of sustainability funds and qualifies companies before an investment is made. Citi Private Bank integrates ESG analysis and criteria in its financial assessment to better identify opportunities and risks.

Mobile technologies from tablets to smartphones have made it easier for clients and bankers to extract all the information and data they require to make timely investment decisions. But data overkill can also overwhelm analysis and decision-making.

Yip warns that as “technology becomes more customer-driven and focused on accessibility, convenience and information-delivery, information overload has become a problem; clients generally manage it by asking only to send them what they should read and nothing more.”

Citi Private Bank is client-driven and can tailor its information platforms. Client-focused services supported by well-designed data and information platforms were forced to evolve during the Covid crisis. While the pandemic impacted everyone’s lives, it has transformed the wealth-management industry in terms of how institutions work and relate to clients’ priorities.

“Not only has it changed clients’ banking patterns, but the pandemic has also accelerated the development of big data and artificial intelligence. It has improved the digital capabilities of both clients and banks and the entire client-engagement experience. The pandemic provided a perfect opportunity to test the agility and efficiency of the front and back-office focused digital solutions that we’ve developed. And the outcome so far has been extremely positive.”

Working from home during Covid for both bankers and clients has made virtual connectivity with clients a necessary and primary communication and engagement platform.

“We’ll continue to fully utilise digital tools in client interactions,” says Yip. “They’ll become an integral feature in our business operations."

“Nonetheless, a personal, face-to-face relationship with clients remains a cornerstone to building trust and establishing fundamental strategies, themes and holdings in a core, long-term portfolio. So we should never substitute relationships with technology.”

Find out more here.

The post At Citi Private Bank, a Relationship with Clients is Key appeared first on Prestige Online - Hong Kong.

Family-owned Hong Kong brokerage Victory Securities builds on a long-established philosophy of client service and dependability.

Survival and prosperity for financial institutions over the decades in tumultuous global financial markets is so precarious that many partnerships, family-owned organisations and corporations have disappeared into the abyss of financial crisis and historical change. Lehman Brothers and Bear Stearns are just a few well-known Wall Street names that no longer exist.

Hong Kong’s capital markets have evolved into the financial hub and centre of capitalism for China. Yet few local family brokers are able to grow large and fast enough to keep up with – and serve the requirements of – the rapidly expanding Chinese economy, and investors who demand increasingly sophisticated services and products.

Victory Securities represents a rare breed of financial brokerage houses, one that’s independently owned and has been operated by the same family for the last 50 years. Today, its management reins are being passed to third-generation family member, Kennix Chan, deputy chief operating officer, who faces market challenges armed with his family’s enduring philosophy.

“My grandfather, Dr Kou Tak Tai, was the founder who established Victory Securities 50 years ago. Its original business was providing securities brokerage services to individuals and corporate clients in Hong Kong. Those were the days when a Hong Kong stockbroker was a bunch of people seated around tables sharing a bank of phones. Trading technology took the form of a chalkboard, where updated stock quotes were scratched in from the old stock exchange,” says Chan.

But instead of being fixated on short-term trading and broking, his grandfather sought to build something more enduring.

“My grandfather believed faith and trust should infuse the entire way the firm conducted business with clients and employees. He regularly said and practised his abiding belief that ‘the clients’ interests always come first.’”

His guiding principles still preside in the form of Chinese calligraphy in the company’s boardroom. Chan distils his grandfather’s vision that continues to inspire Victory today.

“We aim to be a trusted, lifelong partner to our customers and stakeholders in delivering on our core competencies: outstanding service, innovative solutions and wealth creation.”

Such insight and vision were unusual in those early days, but China’s subsequent rise as the world’s second-largest economy and an important financial market has compelled Hong Kong’s stockbrokers to meet global standards or exit the industry. A commitment to flourish in the new environment and sharp market cycles demand an uncommon vision and determined, consistent execution.

Chan says, “Today, we translate those principles into rigorous risk management, downside protection, and capital preservation in our operational decisions, and in the advice we give our clients.”

Survival and prosperity in investment and financial markets is no simple matter of rejecting all risk and avoiding any unconventional opportunity. “We’ve always decisively seized opportunities during market crisis.”

Victory bought its office building during the uncertain atmosphere of the global financial crisis. Aside from establishing a permanent office that offsets rental expenses in a city that was notorious for sharp rent increases, it effectively preserved cash flow. The latter was invested in margin financing and business development, which helped expand the company’s business in the subsequent rising market.

And in 2015, the company thought a financial bubble was peaking, so it decisively reversed its credit position and lowered its margin ratios for clients. Risk-taking and risk management are two sides of the same coin. Yet they can either represent an insurmountable challenge or a once-in-a-lifetime opportunity depending on the viewpoint.

Victory’s corporate culture draws from its decades of experience and market research and analysis to provide a comprehensive range of innovative financial products and bespoke asset management and financing solutions for multinational companies, institutional and individual investors alike.

Victory offers a comprehensive range of securities brokerage services, and asset and wealth management solutions in traditional and alternative asset classes, debt and equity capital markets, and structured financing and investment advice. “We welcome all types and sizes of clients and accounts. Our team focuses on each client’s long-term objectives and their risk and return requirements at different life stages.”

Victory strongly believes in the future of China’s capital markets and is investing heavily in establishing an asset management division in Guangzhou. They continue to expand other segments of their business, such as the wealth management arm, by setting up private funds, trusts and insurance for professional and individual investors.

The company also launched an award-winning app in 2018 for online multi-platform trading. It enables clients to access exchanges across China, Australia, Canada, Europe, Japan, Singapore, the United Kingdom and the United States.

As Chan also proudly points out, “We’ve retained the loyalty of some multigenerational clients whose relatives started with us from our early days. It’s because we listen and take care of them without pushing products. Our competitive advantage comes from an emphasis on flexible decision-making through a lean management hierarchy.”

A family-owned business, Victory considers all employees to be part of that family. Chan describes the importance of cultivating transparent management policies. “Instilling confidence in employees is accomplished through open-minded and inclusive practices. For example, we cover benefits such as employee education and healthcare. We allow for open debate and discussion at all levels. And besides donating to charities, we invest in regular team-building events and off-site training.”

Chan leads his corporate culture with a style that is collegial and consultative. Victory’s business culture values decisive decision-making when boldness and conviction are called for – important traits in a volatile and uncertain environment.

He elaborates his vision on how a financial-services organisation prospers on seamlessly generating and sharing ideas among colleagues and clients, and across cultures.

“Tremendous opportunities lie in providing financial services to the Greater Bay Area, as Hong Kong and the GBA further integrate as a single financial market. Public policies and the rapid growth of China’s middle class are creating a demand for more efficient platforms for mainlanders to invest in a wider range of onshore financial products and access Hong Kong’s offshore financial services.”

Victory is preparing for rapid regional and international growth with representative offices in Beijing, Tianjin, Suzhou, as well as branches in Shenzhen, Singapore, and Japan.

Today, Victory employs around 70 people. Its financial background is sound, with the asset-management and brokerage business still a core revenue generator, especially after its IPO in 2018. While serving its base of institutional and retail clients, it seeks to diversify its business in four major sectors: brokerage, asset management and capital-market and wealth management around the globe.

“We’re well-positioned in China, as our asset-management arm was awarded Qualified Foreign Institution Investor (QFII) status by the China Securities Regulatory Commission (CSRC),” says Chan. “Bond, Stock and Wealth Management Connect programmes between China and Hong Kong are positive developments for future trends in our industry. Bond Connect is especially compelling, as more fixed-income products will come to market. Refining financial connectivity between Hong Kong and China will internationalise finance.”

In Singapore, the company has formed Victory Nest Asset Management Pte Ltd, a venture-capital fund-management firm, which will help it expand its asset management business network to overseas countries. Victory Nest has also applied for a registered fund-management company licence to widen its capabilities.

Cryptocurrencies and virtual-asset products have proven to be both controversial and attractive. Their rise as alternative asset classes can’t be ignored as they disrupt mainstream finance, and high-net-worth individuals and institutions play a role. Chan says he’s closely monitoring its evolution to strategise the group’s future involvement in this new asset class.

Victory Securities is inspired and guided by its past beliefs and distinct culture to confidently move into an uncertain yet exciting future in financial markets.

The post Victory Securities is Finding the Future of Finance by Drawing on its Past appeared first on Prestige Online - Hong Kong.

Saving the planet requires all of us to play our parts – The Peak speaks to Desmond Kuek, vice-chairman in global wealth management at the bank.

The post How UBS is leading the way in the sustainable finance arena appeared first on The Peak Magazine.

Saving the planet requires all of us to play our parts – The Peak speaks to Desmond Kuek, vice-chairman in global wealth management at the bank.

For more stories like this, visit www.thepeakmagazine.com.sg.

There’s no doubt Alex Lam inherited his musical talent from his parents, his father being Cantopop legend George Lam Chi-Cheung, and his mother, Sally Yeh. Still, the singer-songwriter and actor hasn’t let privilege get to his head — he’s not afraid to explore other paths, from a stint in Los Angeles to discover yoga and becoming a yoga teacher, to dipping his toes in fashion.

Lam met Hiro Yoshikawa, founder and designer of Washi Jeans, a Japanese denim brand, a couple years back and was intrigued by the designer’s backstory. Now based in Hong Kong, Yoshikawa is the 18^th generation of a revered sake maker in Okayama, Japan, and the first to leave the family business to pursue his own passion in denim-making. By chance, Yoshikawa had found an old document that charted out his family’s history, written on washi paper. Inspired by this, he developed and patented the Washi No. 6 paper yarn, which he utilizes in his first solo collection launching this month.

Lam, who has always had an eye for detail, quickly became an ambassador and muse for Yoshikawa, and took it upon himself to bring the recognition Yoshikawa deserves by helping him stage his upcoming solo debut.

We sit down with Alex Lam and Hiro Yoshikawa at Washi Jean's studio to talk about style and the upcoming debut of Yoshikawa's solo collection Life on Earth.

Can you describe your style? What are your wardrobe essentials?

AL: My style has always been inspired by musicians. I grew up watching some of my favourite bands like The Rolling Stones, The Beatles, and today, I'm inspired by singers like Drake. For me, my summer essentials include a sleeveless vest, a good multi-functional blazer and a pair of high-quality designer jeans.

Have you always been passionate about fashion and did you want to work in fashion?

AL: I have always cared about how I look and my outfits since I was a kid. I remember there was one time when the collar of my t-shirt wasn't right and I wouldn’t wear it out until my parents fixed it for me. Having friends who are in the fashion industry allows me to execute and experiment my ideas during workshops, like the ‘marshmallow’ colourway of the t-shirt I’m wearing right now. 

How did the both of you meet?

AL: I met Hiro-san thought some of our mutual friends.

HY: have been making jeans for other brands for the past 30 years and it has always been my dream to have my own denim brand. I have always hung out with people from the fashion industry, and meeting Alex from the music and acting world has made my life more fun and exciting.

Can you tell us a bit about your project with Hiro-san?

AL: I was hanging out with a group of producers and we often talk about fashion shows, designer brands’ videos, installation art and music. Once we found out Hiro-san wanted to launch his own denim brand this year, we decided to catch this opportunity and put our ideas together. We are organising a VIP launch event with a fashion show on June 11, 2021.

What was the biggest challenge you had to overcome with this project?

AL: I think the rules of the game changed after Covid started last year. We looked at online fashion shows last year, without the tradition styles, and we knew our team needed to do it in a cleverer way. The restriction for event gathering is 30 persons at the moment, so we were not able to invite too many friends and make the event as big as before. Plus the campaign and fashion show video shoot all in one day, that’s the biggest challenge in this project.

HY:  We have been staying in our studio almost every day is the past few months, meeting different parties like our PR team, models, videographers and producers.

What else are you up to this year that you can share with us?

AL: I have released a new song and I just finished a music video for another song. I have also been working on my YouTube channel and created a few series, but it’s been slightly slowed down because I was focusing in this project.

Has the pandemic affected the way you work or changed your priorities?

AL: Before Covid, I was busy working with clients, who often prepared everything. With changes and restrictions during this period, I am able to organise and create more content by myself.

What are you currently inspired by?

AL: There are many indie musicians and young kids out there who are doing their music in their unique styles. I admire them a lot as they can release songs as long as they think it sounds good. I used think good music requires the best studio and recording equipment, but turned out a lot of indie musicians are producing high quality songs just by working at home.

You have a YouTube channel, you're into fashion, music as well as classic cars. How did you get into each of those passions and how do you balance it all?

AL: Project by project. I’m now focusing more on quantity over quality and I'll keep learning from the progress and mistakes.

Do you have a motto you live by?

Stay healthy. As I was a yoga teacher, I still practice yoga for two to three hours each day. It’s a good way to reflect on myself and find peace.

The post NFTs: a Bubble Within a Bubble? appeared first on Prestige Online - Hong Kong.

In the second of two articles, Mozamil Afzal, Global Chief Investment Officer of EFG Asset Management, continues his overview of the investment scenario in 2021.

With vaccination programmes underway and continued engagement from governments and central banks in supporting their economies, hopes are growing of a faster than expected economic recovery this year, even given the threat of new virus variants. This is certainly evident in equity markets, whereby US and Chinese stocks continue to test all-time highs and major indices are in positive territory for the year thus far. The Lunar New Year has offered a chance to reset focus and the investment outlook. Much like the Ox, we hope that the year will deliver positivity and strength to markets.

Environmental investments have transitioned into the mainstream, having been on the sidelines just a few years ago. Public opinion has grown in support of the environment, there’s been an explosion in the number of environmental, social and governance funds, and even central banks are taking action on climate change. The ECB announced the establishment of a climate-change centre to coordinate its activities in this area, and the Federal Reserve is establishing a Supervision Climate Committee with the same objective. With the major central banks moving ahead, many smaller central banks will undoubtedly follow. Furthermore, the Biden presidency should be a catalyst for the trend.

Furthermore, the Biden presidency should be a catalyst for the trend.
The increased demand for electric vehicles will be part of a general trend towards electrification of economies – including other forms of transport, heating and industry; the trend will be especially notable across Europe, China and the US. Aligned with that trend will be a change in energy production, away from fossil fuels and with a much greater emphasis on electricity from renewable sources. Importantly, wind and solar power are now in many cases much cheaper than fossil fuels. This is a year when we expect the forces of creative destruction to be truly unleashed.

The huge expansions in central bank balance sheets alongside engagement in quantitative easing programmes feeding into economic growth have raised the question as to whether inflation pressures will be triggered. The recent sell-off in US Treasuries would seem to suggest that investors are expecting inflation to rise, whereas the Federal Reserve views any price increases as just transitory. It’s important to remember that despite a recovery in demand, many sectors of the global economy will be characterised by excess capacity in 2021. That will be the case in sectors such as energy, which have a particularly important effect on the overall inflation rate. The evidence from those economies that have made a good recovery from Covid-19 is that inflationary pressures are muted. Consumer price inflation in China was once again negative in January, while producer prices also remain tame.

There’s been a sharp increase in the monetary base, which has been similar to that seen in the Global Financial Crisis. In contrast to the GFC, broad money growth has increased: this potentially poses a bigger threat to future inflation. However, the increase in broad money growth has largely reflected precautionary behaviour by the private sector: for consumers, an increase in bank deposits as consumer savings rates have surged; and, for businesses, an increase in their bank deposits as credit lines have been drawn down to bolster balance sheets and investment spending has been delayed. So, unless this faster broad money growth is maintained – which we think is unlikely – the threat of higher inflation, certainly in 2021, seems exaggerated. That expectation is reflected in financial markets’ pricing of future inflation in the major advanced economies.

With inflation expected to remain low across advanced economies for some time to come, longer-term government bond yields are also likely to remain anchored. However, the durability of US low inflation and bond yields has been questioned repeatedly in recent years. In 2021 the main concern is that with high deficits and debt levels, governments may not be able to borrow as cheaply. Rising bond yields and the associated capital losses are a real concern. Nevertheless, fixed income still has some interesting areas. Look to convertible bonds, which could be set to continue their positive trend seen over the last few years. We also believe there should be emphasis on wealthy nations issuers, which have stronger financial positions than many developed countries and their sovereign and quasi-sovereign bonds can offer an attractive yield pick-up. Finally, the global recovery will provide a supportive backdrop to emerging market debt.
On the equity side, it’s interesting to note that in 2020, global small cap stocks outperformed large cap stocks. This particularly reflected the stronger performance of small cap stocks in Asia.

"With inflation exprected to remain low across advanced economies, longer-term government bond yields are likely to remain anchored"

Mozamil Afzal

We think the performance of small cap relative is due a revival for three main reasons. First, the agility and flexibility often found in small companies can allow them to be leaders in innovation. Second, small companies typically focus on a narrow area in which they have expertise. Third, plentiful liquidity has been built up to support such companies. This is seen in the high levels of private equity dry powder and the recent growth of SPACs (special purpose acquisition companies), which seek out small private companies to take public. It’s still early on in the year, but so far US small caps are outpacing larger peers and we hope for this to continue as we await the next wave of destruction from small innovative companies.

The healthcare sector is our contrarian pick for three main reasons. First, it offers exposure to one of the most important global social megatrends – an ageing population and increased demand for healthcare for the elderly. Second, large healthcare companies are still relatively defensive, dividend-paying businesses, which are attractively valued. In aggregate, the companies in the US S&P 500 healthcare sector trade at a lower forward price/earnings multiple than most other sectors. We think this partly reflects concerns about the possible policies of President Biden, but any likely changes seem well discounted in current valuations.

Finally, the entire sector was disrupted by Covid-19, and the opportunities arising from that will, we think, come to greater fruition in 2021 and beyond. Most importantly, Covid-19 has triggered a much broader adoption of new digital technologies, especially remote patient consultations and diagnostics. At the same time, wearable devices for activity tracking, health monitoring and screening look set for much broader adoption. Minimally invasive techniques and robotic procedures are being seen in areas from heart surgery to orthodontics. The introduction of many of these new technologies is likely to be led by tech, rather than healthcare, companies further enhancing the competitive dynamic in the industry.

Overall, uncertainty remains, but as 2020 highlighted, despite a difficult environment there are new market opportunities out there.

The post 2021 Investment Scenario: Ox-market Opportunities appeared first on Prestige Online - Hong Kong.

For more than 30 years, “Heavenly King” Aaron Kwok has been entertaining audiences in Hong Kong, Asia and around the world and entrusting HSBC to look after his wealth. Recently taking on the lead role of HSBC Jade Ambassador, Kwok is a genuine fan of the bank’s latest four wealth services: Wealth Portfolio Intelligence Service (WPIS), Wealth Financing Solutions, Legacy Planning Solution and International Accessibility.

“HSBC has been there for me when I needed them, whether it be financial planning for my family, international banking services or personalised support for my car-collecting hobby,” says Kwok, who also appreciates the personal service that comes with being an HSBC Jade client. “My HSBC Jade Director is very pleasant, approachable and thoughtful.”

With a dedicated HSBC Jade Director who serves as a personal financial advisor and relationship manager, HSBC Jade clients can enjoy the unique benefits of the award-winning Wealth Portfolio Intelligence Service (WPIS), an all-in-one risk-analysis, portfolio-management and transaction-service analytical investment tool.

“All HSBC Jade Directors receive rigorous training, have a clear understanding of investment and financial-management knowledge and know the latest market information,” says Brian Hui, Head of Customer Proposition and Marketing, Wealth and Personal Banking, Hong Kong. “They will analyse the client’s investment portfolio, and provide full and comprehensive financial-management advice according to different needs and requirements.

“Our HSBC Jade Directors also conduct frequent training seminars with other overseas Jade Directors to ensure that there is best-practice sharing, and to continuously add value to their financial-management and market knowledge.” WPIS enables a better understanding of clients’ portfolios across a wide range of assets, using risk analytics and stress tests, and supported by their dedicated HSBC Jade Director’s insights and expertise. HSBC WPIS won top honours as the Wealth Management Platform of the Year at the Asian Banking & Finance Retail Banking Awards in 2019.

Whenever the need for capturing opportunities arises, HSBC Jade offers two wealth-financing solutions – Wealth Portfolio Lending and Unit Trusts Investment Financing – to give clients greater financial flexibility to meet their increasingly complex lending and investment needs.

Wealth Portfolio Lending – commonly known as Lombard Lending and traditionally available only to Private Banking clients – offers HSBC Jade clients a readily available credit facility of up to HK$40 million, depending on the collateral value of their eligible assets, and can be used for most purposes with very few restrictions. The wide range of assets includes time deposits, bonds, equities, and unit trusts, which are eligible for obtaining the credit facility.

With no fees or interest until drawdown, clients can meet their personal goals or other liquidity needs immediately without disrupting long-term strategies. They can access these funds for a variety of requirements, such as tax payments, property purchases, financing a business or studying overseas, without the need to liquidate.

HSBC Jade clients can also make use of Unit Trusts Investment Financing^ to enhance potential returns with additional leverage for purchasing a diverse array of open-end funds such as equity dividend, fixed-income and income-driven multi-asset funds. Clients will have access to a loan facility once they open and transfer assets to an Investment Financing account.

Both wealth-financing solutions offer clients more flexibility and wealth-growth opportunities, provided that relevant risks such as interest rate risk and liquidity risk are being considered. HSBC Jade Directors will explain the risks involved in wealth-financing and help clients select suitable products with the right level of risk tolerance.

The Jade Global Generations Universal Life Insurance# solution lets clients plan and invest flexibly for their family’s future. It can be customised to meet a wide range of needs to safeguard clients’ loved ones across multiple generations, and provides a choice of policy currencies and currency switch, and change of life-insured for multi-generational planning; clients can also nominate a charity to give a charitable gift.

Moreover, clients in Hong Kong, mainland China or Singapore can enjoy the same Jade status benefits on a comprehensive range of products and services with the HSBC Jade Passport, without any local-account minimum requirements. Clients also have access to HSBC Jade Centres, as well as HSBC Jade exclusive products, preferential rates and an enhanced level of services in these three markets.

“As I travel around the world because of my job, with the HSBC Jade Debit Card I don’t need to exchange the local currency in advance, and if I need a lot of local money I can go to a Jade Centre in that country, such as Canada/US, and get it with no handling charges,” says Kwok.*

“There was a time that I needed to sign a very important agreement in Shanghai, so I contacted my HSBC Jade Director in Hong Kong, who then managed to obtain support from the HSBC Shanghai team to assist me with some arrangements.

“The HSBC Shanghai team soon arrived at the convention centre in Shanghai and helped me to sort out everything. I really appreciate the promptness and can feel the infinite support from them. It’s great that HSBC can help me whenever I need it."*

hsbc.com.hk/jade/

^Investment involves risks. Unit Trusts are investment products and some may involve derivatives, and are not equivalent to time deposits. There would be a higher level of risks and potential greater losses if you decide to use any loan amount for reinvestment. The information provided does not constitute any form of solicitation/recommendation of any investment products or lending products.

#Jade Global Generation Universal Life is a universal life insurance plan underwritten by HSBC Life (International) Limited (“HSBC Life”), a company incorporated in Bermuda with limited liability. It is not equivalent to a bank deposit or savings. Policyholders are subject to credit risk of HSBC Life. Early surrender may be subject to significant charges and proceeds received may be much less than the premium paid. HSBC Life is authorised and regulated by the Insurance Authority to carry on long-term insurance business in Hong Kong SAR. The Hongkong and Shanghai Banking Corporation Limited (“HSBC”) is an insurance agent of HSBC Life. The plan is a product of HSBC Life but not HSBC and it is intended only for sale in the Hong Kong SAR. For monetary disputes arising between HSBC and you out of the selling process or processing of the related transaction, HSBC will enter into a Financial Dispute Resolution Scheme process with you; however any dispute over the contractual terms of the product should be resolved between HSBC Life and you directly.

*Providing service to HSBC clients outside Hong Kong is subject to applicable legal and regulatory requirements, and terms and conditions. The availability of such service will depend on the particular circumstances.

Investment involves risks. Terms & Conditions apply to the abovementioned services. To borrow or not to borrow? Borrow only if you can repay!

The post Aaron Kwok on HSBC Jade’s Bespoke Wealth Management Solutions appeared first on Prestige Online - Hong Kong.

Private equity represents the last resort for weary investors seeking superior, better-than- market returns in today’s bubbling bull market. High prices and low fixed-income yields are so crippling and scary that they must assume high risk through derivatives or structured financial products. Warren Buffett remarked that he can’t find any cheap stocks. Unfortunately, private equity is the most difficult asset class where individual investors can achieve success.

Portfolios need to diversify beyond passive assets, such as exchange-traded funds (ETFs) and other index-tracking vehicles. And everyone wants enhanced returns. Rabid day traders empowered by an army of robotic internet trading platforms moving in and out of liquid markets need to balance their portfolio with long-term investments. Since the 2008 global financial crisis, participating in private-equity and venture-capital funds that invest in technology start-ups is a risky stab at achieving absolute returns – that is, returns that aren’t correlated or tied to passive indices. The ultimate goal for a fund is to find the next Facebook, for example, and make 100 times your original investment in three to five years.

Easier said than done. Harvesting the illiquidity premium – the “private” aspect of unlisted investments – is one of the most difficult challenges in finance. Private equity represents the most labour-intensive investment- management exercise. It requires skills beyond finance to seed, guide and then harvest returns through an IPO or sale or merger.

Investors are highly dependent upon their asset managers, who must marshal a wide array of talents, from finance and technology to determine industry trends. It’s much more daunting than for traditional mutual-fund managers. These alternative assets cover a wide range of both obscure and familiar strategies, from hedge funds to private equity and venture capital. Indeed, the strategies of this asset class can be as obscure as betting on the outcome of merger and acquisition situations, technology start-ups, environmental lawsuits, bankruptcies and restructurings. Deciding which management team can create a successful portfolio in five years is an almost impossible task. Uncertainty of outcome means private equity is also the most expensive asset class, charging around 2 percent per year and a 20 percent incentive fee.

Unless you’re active, knowledgeable and connected in the private-equity business, you’re highly dependent on recommendations from your private banker and wealth manager. If you aren’t a valued ultra-high-net-worth investor, you can’t access top venture-capital or private- equity funds. The demand for proven, successful investment managers is so high that they can pick and choose whose money they accept. Top funds usually turn away investors.

Finding, cultivating and developing the right team and individuals is as hard as assembling a cast for an award- winning movie. It’s not as simple as other areas of banking, where any MBA can process loans. And teams often fall apart for a variety of reasons, leaving their investors with a dissolute management. Translating and visualising the next trend in technology or product development requires both wild creativity and disciplined skill sets. If success were as easy as hiring people with corporate backgrounds, then every successful fund would be staffed by former IBM or Hewlett-Packard employees.

Today’s highly regulated banks are limited as to which private-equity firms qualify to be marketed to their private banking clients. Most of the offerings comprise firms with long track records and established management teams.
No wealth manager wants to be sued for introducing clients into a new fund that suddenly fails. Yet first-time funds featuring people who’ve previously worked together can spin great returns in an untested field.

Research studies have objectively shown that the best private-equity returns across sectors are usually generated by investment bankers instead of management consultants. About 70 percent of private equity returns can be attributed to the entry or buying price of an asset followed by its IPO or sales exit. Investment bankers are trained and experienced at timing markets and negotiating favourable terms. So, believe it or not, “buying low and selling high” is more important than discovering the “new, new thing”.

For example, a common theme in the market over the last several years was investing in funds that developed student housing in cities with numerous colleges and universities. It’s been heavily sold to retail and high-net- worth clients. Unfortunately, units of some of these funds have failed to perform, making them difficult to liquidate. The manager can’t produce enough cash to satisfy unit holders who want to sell. Too many sellers seek an exit, all at the wrong time. And herein lies the investment dilemma for private-equity investors – you need to cope with the lack of liquidity and hope that your manager can generate enough returns to justify this risk.

Investing in publicly listed, private-equity management firms like Softbank or Blackstone is an alternative that offers liquidity. But you risk high market valuations and should carefully study that their management teams’ performance incentives are aligned with outside investors. As in any risky endeavour, the key is discerning what you want and what you want to believe.

The post The Perils of Private Equity Investing appeared first on Prestige Online - Hong Kong.

The investment quality of professional sports has become uncertain and volatile.

First they tell you it’s a business, not a sport. Then when you agree it’s a business, they call it a sport. For decades, professional sports franchises used to be recognised as a reliable long-term investment and an ideal private-equity asset class for ultra-high-net-worth diversification. Recent events have revealed how social media innovations have spawned an entirely new and unpredictable set of risks that threaten their value.

The data points to a grave prognosis. The NBA is suffering the most. In the US, according to Gallup, the percentage of people with a positive impression of sports has declined by 30 points over the past year from +20 to -10 nationwide. NBA first-round playoff viewership ratings plummeted 27 per cent, a 40 per cent drop since 2017-18. A Harris Poll observed that 38 per cent of sports fans explained that the NBA being “too political” is the reason why they’re watching fewer games. That represents a precipitous fall since last summer.

And the NFL is not immune from the social media-driven fan backlash. Sunday Night Football ratings fell by 28 per cent. Fans in attendance are openly booing players. A stunning collapse. Fans appear to be losing interest in sports.

[caption id="attachment_211699" align="alignnone" width="768"] (Image: Stephane Coudassot/Unsplash)[/caption]

The NFL and NBA are among the most popular sports leagues in the social media universe. Their content represents leading feeds on Twitter and Instagram. And yet despite their proven position in public, their ratings continue to plummet.

But not all leagues are waning. The UFC (Ultimate Fighting Championship) is experiencing strong gains. Despite basketball playoffs being played on a daily basis, NBA playoff viewership has declined from 2.39 million average viewers in 2019 to 1.68 million in 2020 – a 30 per cent decline. Meanwhile the UFC’s four preliminary fight cards since its emergence from Covid-19 have generated an average of 1.17 million viewers across ESPN and ESPN+. That’s an increase of 30 per cent compared with the viewership of pay-per-view preliminary fights in 2019. Average UFC ratings are trending upwards at a time when the NBA’s are shifting downwards.

More people should be watching pro-sports since many are homebound during the pandemic. Despite the re-opening of cinemas, attendance is falling, as box-office numbers have demonstrated. While it appears that fans resent the direct engagement of players and teams in social justice issues, greater technological forces are at work which may change the very idea of how professional sports are valued and governed.

Professional sports leagues have historically generated healthy, long-term private-equity returns – they’ve been a source of smart diversification for billionaire investors and syndicates. It’s a reputable private-equity class that allows owners a high-profile, celebrity status. They are also platforms for philanthropy and community affairs.

For example, Joseph Tsai, co-founder of Alibaba, is estimated to have paid US$3.3 billion for the Brooklyn Nets and Barclays Center. The previous owner, Mikhail Prokhorov, invested and spent about US$1.5 billion nine years ago. So doubling your money in nine years is a respectable return on a private, billion-dollar investment.

[caption id="attachment_211700" align="alignnone" width="1024"] (Image: JC Gellidon/ Unsplash)[/caption]

Recent events have pushed owners to decide if they’re investing in a sport, a social organisation or a business in the post-pandemic and Black Lives Matter era. Then are the players actually business partners with the owners who provide all the capital? Owners could have disagreed with player demands to support Black Lives Matter, but at a high cost. The business schism between owners and players threatens to destroy or split the league and make pro sports an unattractive investment.

The outcome for the sport as a business has impaired or confused corporate governance within the NBA as owners have been subverted. Their commissioners are supposed to work for the owners, not the players. Unless this division is resolved, the league’s corporate mission, message and product will be irrevocably divided. Fans will be confused and seek alternate and substitute forms of entertainment.

Players used to audition for teams. Now teams audition for players. The emerging ownership-player-fan relationship model may look nothing like the traditional one. Post-pandemic, league revenues may fail to recover and severely impact their social and financial model.

Social justice is only a current topic in this sports revolution. Technology’s relentless role in subverting and disintermediating established groups and relationships is unpredictable and unstoppable. It empowers and consumes everyone in its path. Social media and mobile computing have opened the door for anyone to either broadcast within their social silo or to the outside world.

Twitter was initially called text messaging for people without friends. But why make friends when you can build a following – and change your world? It’s emerged as an unavoidable platform for the liberation of one and many. And this version of disintermediation is pernicious, because it takes on a life of its own, tearing apart a global brand, a jointly shared common community product such as sport, as frustrated fans retreat into their own social media silos.

This story first appeared on Prestige Singapore

(Main and featured image: Bertrand Gabioud /Unsplash)

The post What You Should Know About Investing in Professional Sports Franchises appeared first on Prestige Online - Hong Kong.