Wealthy Investors in Asia-Pacific Are Not That Interested in Cryptocurrencies
Cryptocurrencies represent less than 1% of the investment portfolio of high net worth individuals (HNW) in Asia-Pacific, despite considerable holdings of alternative assets.
New figures from the data and analytics company GlobalData found that alternative investments make up 12% of the average HNW APAC investor’s portfolio, but after interest in crypto peaked in 2020, they unloaded it last year, so it only represents than 0.7% of their assets.
Government repression in countries like China is believed to be one of the main reasons why HNWs abandoned crypto.
GlobalData conducted the “Global Wealth Managers Survey Q2 2021” with 360 wealth management executives in 19 countries to gather their insights. His HNW Asset Allocation Analysispublished last month, revealed that the HNW investor segment in Asia-Pacific allocates a significant share of investments to high-growth alternative investment products such as art and collectibles, private equity and cryptocurrencies.
APAC HNW investors gradually started including cryptocurrencies in their portfolio before the Covid-19 pandemic. However, the share of cryptocurrencies increased in 2020 as the value of other asset classes declined.
Siddharth Agarwal, director of Financial services at GlobalData, said that despite bitcoin’s worth over 60% last year, it’s still 20 times higher than the price at the start of 2017.
“As a result, bitcoin and other cryptocurrencies have become one of the popular alternative investment assets for modern high-risk investors in recent years,” he said.
“However, the share of cryptocurrencies in the portfolio composition of high net worth individuals in Asia-Pacific has declined in 2021, with regulatory restrictions in some Asian countries significantly affecting its desirability as an investment vehicle.”
Agarwal said China effectively banned all cryptocurrency transactions in September 2021, and its gradual ban, likely started in 2019, has stifled both a key source of demand for many currencies and a major hub. mining to mint new coins.
An outright ban on transactions in all forms of crypto in China in 2022 has clearly impacted HNW’s investment portfolio, with a noticeable decline in the overall share devoted to cryptocurrencies, while current changes economic pressures such as inflation are likely to pay off against additional spending. interest,
“In addition, the recovery in stock prices and optimism in the first half of 2021 also played a role. Rising stock prices increased the share of stocks in the HNW portfolio, already its largest component,” he said. -he declares.
“GlobalData predicts that wealthy investors in Asia-Pacific will stock up on alternatives in 2022 to counter the impact of rising inflation. However, the share of cryptocurrencies is unlikely to return to 2020 levels.”