UBS Group AG is maintaining fund flows at its Taiwan wealth unit and expects double-digit growth this year even as tensions with China spook investors.
(Bloomberg) — UBS Group AG is maintaining fund flows at its Taiwan wealth unit and expects double-digit growth this year even as tensions with China spook investors.
While some clients are transferring assets to financial centers such as Switzerland or Hong Kong, others are reconfiguring their portfolios and bringing funds back to Taiwan, said Henry Su, head of wealth management for UBS in Taiwan. In addition to geopolitics, clients are considering intergenerational wealth transfers and supply-chain issues, he said.
“In the past, it’s much more about the S&P performance after one quarter,” he said, referring to the US benchmark stock index. “Now we see very different things on top of our clients’ minds, especially around those three trends.”
UBS Taiwan’s wealth management business is hoping to achieve double-digit revenue growth this year, in line with business expectations. It plans to offer alternative investments, to which Taiwan clients have historically had little access, and focus more on onshore banking for the island economy.
“It’s important for us to get out of our comfort zone,” Su said in an interview in Taipei. “We are going to go even more local.”
UBS Taiwan currently has about 450 staff, and the firm expects that number to increase to more than 500 in the next five years, Su said.
Tensions with China are top of mind for investors, especially ahead of the territory’s presidential election in 2024. Last year, global financial firms asked staff to review contingency plans, while Taiwan banks have slashed their exposure to China to the lowest level in at least a decade. Taiwanese businesses have significantly reduced their new investments in China as they diversify manufacturing locations.
Investment Flows
Taiwanese firms pulled a record amount of investment income out of China last year, according to local media. Taiwanese listed companies repatriated NT$114 billion ($3.7 billion) of investment income from China in 2022, according to a statement from the Financial Supervisory Commission.
For the second or third generation of business owners, assuming they still consider Taiwan home, the families have to consolidate their overseas wealth back to Taiwan to plan for intergenerational wealth transfers, according to Su.
In April, the People’s Liberation Army in China completed three days of military exercises around Taiwan after President Tsai Ing-wen visited the US. Last year, the PLA nearly doubled the number of military flights around the island to more than 1,700.
“Some clients reacted strongly and transferred their funds elsewhere, while some just asked ‘what do you think and how should they plan for it?’” said Su of the reaction to the military drills.
Despite geopolitical concerns, banks have been expanding their wealth services in Taiwan amid a regulatory push. HSBC Holdings Plc recently opened new wealth management centers while the finance commission has been approving more local banks to provide services to high net worth clients.
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