By The Nation
“The global market has witnessed high volatility this year, thus investment is a challenge. KBank therefore focuses on development of investment innovations for risk management in diversified portfolios that offer satisfactory returns in the late-cycle of the global economy,” he said.
KBank sees a good opportunity for our customers to adjust their investment portfolios and shift to K-Alpha, focusing on a risk-based allocation strategy, and alternative investments such as gold and over-the-counter stocks in order to lessen risks. As evidenced, K-Alpha portfolio has grown 12.5 per cent so far, with its risk standing at 4.5 per cent. Therefore, the portfolio’s risk-adjusted return is as high as 2.8 times, he said. Average investment return over the past five years stood at 5 to 7 per cent, depending on individual client's risk profile.
KBank Private Banking has continued to grow this year with 11,600 customers and assets under management (AUM) worth around Bt 750 billion; investments worth Bt450 billion, up 7 per cent; and a 24.7-per cent rise of investment in complex assets year-on-year, he said.
In 2020, KBank will continue to offer the most comprehensive personal finance advisory service in Thailand and strengthen its partnership with world-class wealth manager Lombard Odier. The first KBank Private Banking Lounge will be launched at EmQuartier department store for added customer convenience, thanks to its prime location in the same building as our office. This will enhance our brand visibility and reaffirm our successful collaboration with Lombard Odier, Jirawat said.
“Despite the world economy continuously showing signs of slowdown, KBank does not anticipate a recession in the next 12 months, ” he assured. “We think that the world’s capital markets will continue to be highly volatile next year, which could easily trigger market panic. There is a chance of a market correction due to stretch valuation this year, it could be a drop of 5 to 10 per cent or more,” he warned.
Investment will become more difficult, with major risks coming from political uncertainties due to international trade disputes and the 2020 US presidential election. Investment returns form capital market next year would be in single digit, down from double digits this year, he said.
KBank has come up with five strategic investment recommendations for our clients next year: 1 Diversify risks and increase flexibility in their investment portfolio; 2 Safeguard their portfolio with safe assets such as gold, and apply hedge funds’ equity long/short strategy; 3 Focus on carry strategy for high-yield assets which generate higher interest rates; 4 Adopt a cautious approach in stock investment by choosing business groups with solid net profit growth, such as stocks in healthcare, technology and energy segments, as well as stocks of some attractive emerging markets; 5 Create additional returns on alternative assets such as real estate, private equity funds and infrastructure, which are less volatile in terms of market prices but are suited to long-term investment of more than five years, he revealed.
"They should represent a small proportion of the portfolio,” Jirawat said, adding that "clients would be protected or they could even take advantage of it should a market correction occurs next year".
Jirawat cited product and service innovations as key to the impressive performance of the KBank Private Banking this year.
"The product and service innovations recommended to our customers have also enabled KBank to win a total of 14 awards related to private banking, from nine international institutions, he noted. These included “Best Private Bank in Thailand” awards from Asian Private Banker, Finance Asia and The Asset; “Best Private Bank in Asean” from The Digital Banker, he noted.
"In addition to the “Outstanding RM Training and Development Programme” award, which reflects our leadership in human resource development, KBank also won the “Outstanding Wealth Management Technology Initiative - Back Office” award from the Private Banker International Global Wealth Summit and Awards 2019, in recognition of our leadership in private banking business technology. We have also received the “Best Private Bank for Digital Culture Asia” award and “Best Private Bank for Digitally Empowering Relationship Managers Asia” award from PWM’s second annual Wealth Tech Awards, highlighting our success in the private banking business".
To brace for the late-cycle global economy, the bank recommended that clients adjust their investment portfolios and reduce overall risks by raising the proportions of investment in core portfolios, safe haven assets and cash, as well as reducing risks from growth stocks, while focusing on the following innovation-based funds:
1 Sustainability Fund (K-CHANGE): The fund invests in companies that attach importance to the environment, society and governance (ESG) for sustainable growth over the long term, including those creating positive impacts to the world.
2 Private Equity Fund: The fund invests in private equity worldwide, and is the first-ever private equity fund in Thailand.
3 Fixed Maturity Fund: The fund invests in fixed income instruments in Asia for a specific investment period. It generates higher returns than interest rates, which are on a downward trend, and automatic redemption of investment units as scheduled upon maturity.
4 New Risk-based Allocation Fund (K-GLAM): The mixed fund uses a risk framework to control portfolio adjustment.
"Family wealth planning service and non-capital market investment were first introduced in Thailand by KBank Private Banking in 2015. Also, KBank Private Banking has steadily improved other services by, for example, helping clients establish their family governance, family constitution and family office, and providing them with recommendations on the use of their land. This year, our clients are particularly concerned about tax planning, especially issues related to the new Land and Building Tax Act. We have advised our clients on tax liability management through the Land Loan for Investment project, which has attracted strong interest from the customers, translating to more than Bt12 billion in combined land value and around Bt 6 billion of total financial facility," Jirawat added.