Asia’s wealthiest families are snapping up dollars as a haven from the volatility plaguing financial markets, providing another source of demand for the greenback.
Rich individuals are chasing the greenback’s rally to a decade-high as the U.S. prepares to raise interest rates for the first time since 2006. Stamford Management Pte in Singapore, which oversees $200 million for Asia’s multi-millionaires, says about 90 percent of its holdings are now in the U.S. currency. SandAire Ltd. and Woodside Holdings Investment Management have boosted dollar assets to the maximum their rules allow.
“The U.S. dollar has moved relatively quickly, and that left a lot of high-net-worths behind,” Jason Wang, Stamford’s Singapore-based chief executive officer, said Wednesday in an interview. “Non-professional investors are not usually the first movers or innovators of a major trend, so there’s still a lot of pent-up demand.”
Markets are becoming more dangerous, particularly for smaller investors, as geopolitical turmoil from the Middle East to Ukraine combines with surprise policy announcements in the euro region, Switzerland, Singapore and Canada, to stoke price swings. With the U.S. economy outperforming its developed-world peers, the dollar is increasingly viewed as the best antidote to the increase in risk.
Larger investors have known this for months. Hedge funds and other major speculators pushed net wagers on a stronger dollar to a record 448,675 contracts in the week ending Jan. 13, according to the Commodity Futures Trading Commission in Washington. They fell back to 437,873 last week, the first decline since mid-December.
Asia’s importance to the global economy is increasing, with the region’s developing nations accounting for 39 percent of global growth last year, compared with the European Union’s 30 percent and 22 percent for the U.S., according to the International Monetary Fund. The proceeds of that growth are increasingly being plowed into dollar-denominated assets.
Stamford, Woodside and SandAire are what’s known as family offices, established to manage the wealth of one or more rich families, rather than the companies or banks served by larger institutional investors.
SandAire, which has offices in London and Singapore, was set up in 1996 to oversee the investments of U.K. businessman Alex Scott and his family after he sold two family businesses. It’s seeking to limit its exposure to currencies including the euro, pound and yen.