By The Nation
Regarding the global sell-off of equities due to growing fear of the coronavirus epidemic, the bank's executives said today (February 26) that investors should diversify to safe-haven assets, such as gold as an alternative to the highly volatile stock markets. Currently, fund managers have increased their investment in bond holding, up to 80 per cent of their portfolio, leaving just 20 per cent in stocks , they said. They also have cash in hand for new investment when opportunities rise. K-CCTV, a mutual fund which invests in China’s stocks has cash more than 10 per cent of its portfolio amid a market downturn there.
Jirawat Supornpaibul, head of Private Banking Group at Kasikornbank, said given the current technological disruption and economic volatility, investment strategies that mainly focus only on returns and traditional business models can no longer secure long-term growth. The bank aspires to open up a new chapter of comprehensive wealth management in Thailand to build a strong foundation for the next generation who is taking a more active role in shaping the course of society, he said. Kbank Private Banking has Bt750 billion in assets under its management.
By working closely with its strategic partner, Lombard Odier, KBank Private Banking is implementing the ‘3S’ strategies: 1) Sustainable investment approach, 2) New dimension of wealth sharing, 3) S-Curve re-innovation
Funds have been allocated to invest in clean energy, such as wind farms in Europe in light of global climate change, while wealth sharing aims to reduce the widening gap of the rich and the poor in order to maintain social harmony, he said. The bank has held talks with two charity foundations with Bt10 billion in funding each to help them manage their finance efficiently for social benefits.
Sustainable investment approach
Siriporn Suwannagarn, head of Private Banking Financial Advisory said, "Global investment communities are putting more emphasis on supporting businesses with a strong commitment to sustainability. Sustainability is more important than IT revolution because it will sustain our lives”.
These companies are considered not only significantly contributing to the environment and the society, but they also have the potential for long-term growth, which will eventually drive their valuation to be higher than other businesses. In 2020, KBank Private Banking is embedding sustainability into every investment advisory given to customers to reduce risks and create stable growth. Additionally, we will be introducing investment strategies on impact investing and a series of sustainability funds throughout the year.
“In 2019, we have introduced the mutual fund K-HIT to allow customers to invest in mega-trend-themed businesses, such as Next Generation Energy, Clean Water and Land, and Health Tech. This thematic fund is among the highest-performing fund during the lackluster market situation. Early this year, when the global stock market suffered a serious blow from the COVID-19 outbreak, K-HIT still performed well with as high as 9.08 per cent returns as of February 24” said Siriporn. “Our risk-based asset allocation has worked for us well”.
The return on investment for KBank Private Banking customers was 14 per cent last year. However, due to global equity sell-off , the return stood at 0.5 per cent as of February 25 this year. “We have succeeded in maintaining positive returns while other fund managers may have slided into negative territory , “ said Siriporn.
New dimension of wealth sharing.
Triphon Phumiwasana, head of Private Banking Business Head, said : “The high-risk investment landscape not only affects business operations, but it also has a far-reaching consequence to charitable activities. In Thailand, many philanthropic organisations that own hundreds of billions in assets still primarily employ a low-risk approach to asset management, which can no longer regularly generate substantial returns in the current financial climate and, therefore, robs them of an opportunity to make a difference to the society in their full potential.
“Looking to create direct social impact, KBank Private Banking will move forward this year to open up a new dimension of asset allocation for philanthropy. We aim to unlock the potential of Thai foundations by providing effective risk and financial management services, collaborating with Lombard Odier in offering advisory in fund management, fundraising and governance structure, and hosting seminars with global funds to share international best practices in philanthropic investment with local charitable bodies,” said Triphon. Charity funds in Thailand are estimated to be worth Bt 500 billion. If it could generate annual return of 2 per cent, there would be an extra Bt10 billion injecting into the economy, he added.
Nont Buranasiri, head of Private Banking Family Wealth Management said: " Technological disruption is one of the top worries of our high-net-worth clients, who are owners of large corporations looking for innovative business models. KBank Private Banking aims to be a connector between the world’s rising innovator companies that need investment and our customers who are seeking opportunities to build a new S-Curve for their businesses.”
“Previously, we hosted a series of events to share with our customers know-hows on new business models, such as KPB Academy. We also connected our customers with global disruptor networks. In 2020, we will be providing our advisory service in investment into these innovative companies such as Google, in the hope of playing our role in stimulating the next generation jobs and the country’s economic development,” added Non