HSBC Private Banking

Competition 2022
Client Profile
Client’s Stage of Life, Investment Constraints, Risk and Return Objective

Client Description Goal & Risk Profile

Stage of Life Goals

Asset Management and pursue Single Stock Financing

Mr. Tan’s Risk Profile

current
standing Returns

Client hopes to achieve X% return

Investment Horizon

Key Client Information Client has a long investment horizon of approximately 10 years

• Sole Founder of Biotech Asia Pacific ($200,000,000 USD Liquidity Needs

Market Value)
- Children’s education
• 45% ownership of Biotech Asia Pacific
- No strong demand
• High Tertiary education for two teenage children – ages 14
and 16
• Concerned regarding economic recession and inflationary
pressures
• Risk taker

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Client Profile Investment Outlook Portfolio Construction ESG Analysis Conclusion
Investment Outlook
Macroeconomic Climate and Potential Risks

Outlook according to Asset Class

Short term: As interest rates have reset higher, fixed incomes would be
favorable. Still noting that volatility remains high as central banks shift away
Fixed from easy-money policies.
Income Long term: There will be stronger and tighter policies which leads to
segmentation on a global level. Singapore will relatively belong in the ultra-low
rates and unlimited liquidity quadrant-– leading to a winning formula
Short term: Inflation remains one of the essential elements to keep a look out
for.
Equities Long term: Concurrent to ESG progress in the market, equities will grow slowly
and steadily.

Short term: Not that drastic of a change, because thematic investments are commonly
favorable as a downside protection during social and economic crisis.
Thematics Long term: Investing to companies with inexhaustible resources is more sustainable in the long
run since it looks at how innovations and improved risks management drices the financial Fig 1.0 Singapore’s inflation rate 5 years front
performance.

Short term: As volatility persist in the short run, a shifting array of price
Hedge Funds
dislocations and unexpected opportunities will follow through.
Long term: The market’s transition to a greener economy will automatically
give rise to hedge funds as it will attract greater investment flows.

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Client Profile Investment Outlook Portfolio Construction ESG Analysis Conclusion
Portfolio Construction
Asset Allocation – SAA, TAA

Asset Class SAA % TAA % Asset Class SAA % TAA %

Fixed Income 42 Alternatives 19
U.S Inv Grade Corporate Bonds 8 3%-13 Multi-Strategy Hedge Funds 1
Emerging Markets Sovereign 3 (-2%)-8
Debt Equity Long Short Hedge Funds 1
Emerging Markets Local 13 8-18
Currency Debt Global Macro Hedge Funds 1
Emerging Markets Corporate 10 5-15%
Bonds Real Estate Liquid Alternatives 15
Money Market Securities 2 (-3%)-8
34 Equity Market Neutral Liquid 1
Equities
Alternatives
U.S Equity 31 26-36
-5%-(-15)
Japanese Equity -10
Asset Class
AC Asia ex-Japan Equity 13% 8-18
Thematics 5

Digital Transformation 2 (-3)-7

Investing in a Sustainable
Future (ESG)
3
-

Fixed Income Equities Thematics Alternatives

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Client Profile Investment Outlook Portfolio Construction ESG Analysis Conclusion
Environmental, Social, and Governance (ESG)
ESG Capabilities within HSBC

What to consider when doing an ESG investment

Environmental - Analyse the value cost of adopting environmental issues changes towards the company

The higher the cost for adopting the environmental issues ≠ higher risk, because when considering environmental factors, we consider
replenishable and inexhaustible sources meaning in the long-run the risk of it to run out is limited since it can be a guard as downside
protection during economic and social crisis (e.g., price war between oil producing regions results on increased investment on green
energy)

Social - How the company advances and implement diversity

When considering the social factor in ESG during investment we look at the global diverse workforce, talent development, talent
retention. The more developed the talent are in a company higher the chances that the company develops more advanced ideas to
minimise risks and create innovation to sustain the business. While diversity in a business adds up to the ideas and openness to change of
the company.

Governance – Processing and governance in a company

Ensuring that the company that will be invested in has high transparency, efficiency on working, and accountability. Conscientiousness in
a company impacts heavily on the retention and the outlook of a company, because it determines the effectivity of the company system.

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Client Profile Investment Outlook Portfolio Construction ESG Analysis Conclusion
Conclusion
Investment Takeaway

Investment allocation decisions

Mr. Tan should sell his stake in the company. With that, we foresee an overshooting
potential to allocate a majority of his funds to equities due to his personal needs and
wants compared to investing in fixed income, thematics nor hedge funds.

Considering inflation in an investment horizon of 10 years.

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Client Profile Investment Outlook Portfolio Construction ESG Analysis Conclusion