【By Liu Bai, Observer Net】According to a report by Nikkei Asia on October 19, in the context of escalating Sino-US trade tensions, the investment strategies of Asian super-rich have been adjusted, significantly increasing their allocation to Chinese stocks, fixed-income products, and gold, aiming to seize growth opportunities brought by artificial intelligence (AI), while hedging against market volatility and interest rate changes.

The report states that although the Sino-US trade tensions have not shown signs of easing, investors now have a clearer understanding of the direction of U.S. policy compared to when the Trump administration imposed "reciprocal tariffs" on trade partners in April.

Lok Yim, Head of the Hong Kong-based Asia-Pacific Regional Global Private Banking at HSBC, said that the "confidence and risk appetite of Asian wealthy investors have steadily improved since the second quarter," attributing this trend to "more resilient economic activity, AI-driven corporate earnings exceeding expectations, and the restart of the interest rate cut cycle."

Data from Wealth-X, a market research company specializing in analysis of the wealthy, shows that the total wealth of Asian super-rich (individuals with net worth of no less than $30 million) increased by 10% in the first half of this year. As their wealth accumulates, Asian affluent investors have started to focus on the rising trend in the Chinese stock market.

The bull market in the Chinese stock market has been driven by DeepSeek, as well as more IPOs and retail investors who accumulated savings during the pandemic.

The Hang Seng Index in Hong Kong has risen about 26% this year; the CSI 300 index in mainland China has climbed nearly 15%.

Gabriel Chan, Head of Investment Services at BNP Paribas Wealth Management in Hong Kong, said that the interest of Asian wealthy investors in Chinese assets has "significantly increased." "But I must emphasize that these funds are new investments from local clients."

Chan stated that the overvaluation of U.S. AI stocks and the "circular investment" phenomenon among U.S. tech giants have prompted Asian clients to turn their attention to China.

Employees of the New York Stock Exchange working. Visual China

"For investors outside the United States, the sustainability of circular investment is questionable, so they prefer to diversify their investments," he added. "Compared to the U.S., China's valuations are much cheaper."

He said that last year, about 65% of his company's stock transactions were concentrated on U.S.-listed stocks, while this year it was 45% on the U.S. and 45% on China, with the rest distributed across Europe and Japan.

Chan said that these affluent investors prefer to allocate stocks through structured products (such as yield-enhancing products) rather than directly buying cash stocks.

In Japan, affluent investors maintain a firm preference for U.S. stocks and U.S. Treasury bonds.

Daiju Aoki, Chief Investment Officer of the Tokyo Regional Office at UBS SMBC Trust Wealth Management, said that many Japanese billionaires have become accustomed to the "TACO trade" (meaning "Trump always backs down at the last minute"), believing that Trump often compromises under threats.

Aoki said that Japanese wealthy people have a "strong preference" for dollar assets because they believe Japanese companies can benefit from business dealings with the U.S. and the depreciation of the yen. Income denominated in dollars will boost corporate profits when converted into the weak yen.

Wealth-X data shows that Asia is the second-largest region in the world for ultra-high-net-worth individuals, both in terms of number and asset value. As of June, the total wealth of Asian billionaires reached $14.8 trillion, matching Europe's $14.7 trillion, but its wealth growth rate is about twice that of its European counterparts.

In a report released in September, Wealth-X predicted that the growth in the number of ultra-high-net-worth individuals in Asia will lead globally by 2030. India stands out particularly, with four of the top ten cities experiencing the fastest growth in ultra-high-net-worth individuals globally located in India, namely Bangalore, Mumbai, Hyderabad, and Delhi.

A wealth report released by Citibank in September showed that the proportion of publicly traded stocks in Asian family office portfolios reached 32%, higher than the global average of 27%; cash assets accounted for 18%, also higher than the global average of 13%.

With developed countries and Asia entering a rate-cutting cycle, Asian investors have shown increased interest in fixed-income products.

Yvonne Leung, Head of the Hong Kong-based Asia Custody Solutions at JPMorgan Private Bank, cited an internal survey stating that although investors are more willing to invest in stocks, "in reality, customers have been more actively shifting cash to fixed-income products in recent months, mainly to prepare for the widely anticipated rate cuts."

Lok Yim said that Asian investors "currently tend to choose global investment-grade bonds to hedge against market fluctuations."

Wealth management professionals said that Asian super-rich are increasing their exposure to gold to achieve asset diversification, while maintaining a wait-and-see attitude toward cryptocurrencies. The value of both types of assets has risen sharply this year.

Last week, gold prices hit a historical record of over $4,300 per ounce, with a gain of more than 60% this year. This follows China's inclusion of five rare earth elements in its export control list, which escalated Sino-U.S. trade tensions.

Yvonne Leung from JPMorgan said that due to the relatively low correlation between gold and traditional asset classes, this precious metal has "played an important role" in helping clients diversify their assets.

She said, "The allocation to gold has increased," but she usually recommends a holding ratio of no more than 5%, as gold does not generate cash income.

Shintaro Takayama, a banker at the private banking department of SMBC Trust Bank, said that gold has become an "asset of focus" for Japanese investors, with some planning to increase their holdings. He added that with the surge in global gold prices and central bank gold purchases supporting the market, "they are considering holding gold as a long-term asset."

The report points out that despite being at the forefront of cryptocurrency applications globally, such assets have yet to attract Asian billionaires.

A wealth report from Citibank shows that the proportion of Asian family offices that are "uninterested or not prioritizing" digital assets is the highest globally.

The high volatility and risk of cryptocurrencies are hindering Japanese billionaires from investing. Ryoichi Toori, head of the private sector at SMBC Trust Bank, said: "None of my clients are interested in cryptocurrencies."

This article is an exclusive piece by Observer Net. Reproduction without permission is prohibited.

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