While countries such as China and South Korea may first come to mind as Asian wealth centres, Thailand has quietly established itself as having one of Asia’s most lucrative pools of investable assets.
And while the country’s wealthy have tended in the past to keep their riches onshore, that is changing. High net worth Thais these days are increasingly seeking overseas investments – opening up the next big Asian asset management story.
In 2017 alone, the number of Thai high net worth Individuals rose 15 per cent to surpass 122,000 – roughly on par with Singapore. Meanwhile, Boston Consulting Group estimates that Thailand’s onshore wealth will grow to $1 trillion by 2023. Today only about one-tenth of that amount is held overseas, with most in products such as deposits and insurance.
A new breed of younger Thai HNW individuals is looking further afield to areas from real estate to alternative investments. According to Swiss private bank Julius Baer, that translates into “unprecedented growth opportunities” for Thai asset management.
“We see vast potential … compared to more mature markets in the region, as Thai HNWIs grow more sophisticated and regulations and policies are liberalised,” says Jiralawan Tangitvet, CEO of SCB Julius Baer, the Swiss firm’s joint venture with Siam Commercial Bank.
Global asset managers are now setting up in Thailand and focusing on Thailand's HNWI. Credit Suisse opened a Bangkok office in 2016. Julius Baer launched its wealth management joint venture with SCB in March 2018. In February last year, Luxembourg’s LGT launched a Thai asset management business.
In one of the most significant moves, the asset management unit of Singapore’s DBS Bank announced plans last year to double the number of its wealth managers in Thailand to 70. By taking advantage of deregulation that enables Thais to move more money overseas, DBS Vickers aims to double Thai assets under management to nearly US$6 billion.
DBS is south-east Asia’s biggest bank and hoping to capitalise on Singapore’s privileged place in regional wealth management. According to a Julius Baer survey, Thai HNWIs ranked Singapore as their top offshore destination, above the US and Hong Kong.
“Thai wealth investors are relatively conservative with offshore investments, but this is beginning to change,” Sim S. Lim, DBS head of wealth management, told the Bangkok Post.
“As they get richer, they’re becoming more sophisticated and receptive to investment ideas, and are seeking holistic wealth management services and global investment strategies.”
A drive for holistic investment advice
Thailand’s family-owned businesses previous investment conservatism is giving way to a desire, says DBS’s Lim, for a global “one-stop provider” that grasps family and business requirements while being able to offer investment expertise both to drive returns and enhance safety beyond Thai shores.
Market volatility caused by the coronavirus crisis will only increase the need for professional advice amid domestic and global COVID-related risks.
Simon Michaels, a Partner at Mishcon de Reya Singapore and the CEO of the private family advisory company MDR Mayfair Singapore, commented: "With the international diversification of assets that is today so prevalent, wealthy families and individuals should be looking closely at family governance dynamics and seeking advice not only in relation to tax, regulation and structuring but also political risk issues."
Fintech futures to spread asset management bounty
These shifts are complemented by domestic fintech innovation which is driving digital banking and democratising asset management for Thailand’s growing middle classes. For example, Finnomena is a digital Thai asset management startup that deploys proprietary machine learning algorithms and robo advisory to bring sophisticated investment guidance to Thailand’s up-and-coming. It began this year by attracting $10 million in a Series B funding round.
With 240,000 subscribers, Finnomena is proving that Thailand’s aspirational asset management journey isn’t only for the super-rich. And the story is just beginning.