LGT Group, a privately owned Liechtenstein-based asset management and private banking firm, will open an office in Beijing for its alternative investments business.
The firm celebrates its 25th anniversary of having a presence in the region this year, and is looking to strengthen its brand in Asia by emphasising its independent status and manager selection capabilities for traditional and alternative investments.
The plan is that the Beijing office will provide research insights and liaise with investment managers – such as private equity and venture capital firms – that operate out of the city and mainland China in general, said Prince Max of Liechtenstein, chief executive of the LGT Group, on a trip to Asia.
He stresses that the office will not be servicing private wealth clients onshore. “That is heavily regulated at the moment and for businesses like ours is not yet suitable.”
This follows LGT commencing to book assets in Hong Kong in August, having obtained a banking licence in the territory in April. The banking licence in Hong Kong presents a natural progression of LGT’s business activities in Asia where the group has been consistently growing over the past 25 years, he says.
The local banking licence allows LGT to offer its clients an alternative booking centre as well as an enhanced local platform, says the prince. The group started out with a representative office for LGT Bank in Liechtenstein in 1986.
Then in early 2000, when the private bank made a bigger push into Asia, it decided to set up a booking platform in the region, and began with Singapore in 2003. That's because Hong Kong's imposition of estate duty made it less attractive to book assets there, he says.
But once Hong Kong abolished estate duty in 2006, “we put [the booking centre] back on the table, but then the crisis hit and delayed it again,” says Prince Max, hence it not being obtained until this year.
So where does he see the best opportunities in the region?
For one thing, he is optimistic about the opening of the renminbi market. “Using Hong Kong as an offshore market is very smart – it lends itself very naturally to that purpose,” he says. “[China] has always jumped on those opportunities, and has this time made itself a great opening for the next 20 to 30 years.”
Another investment he points to – both globally and in Asia – is insurance-linked bonds. “This is a very interesting asset class, particularly in the kind of market turmoil we're seeing now,” says the prince.
“The returns from insurance-linked funds are not really driven by what's going on in the broader capital markets, but by risks posed by natural disasters,” he explains. “It's a different type of risk you're taking, so the returns are uncorrelated to the more traditional markets.” Hence it makes a lot of sense to include these in your allocation, he notes.