We’re so early, sure, but Singapore and Hong Kong’s high-net-worth individuals seem to be advancing at a faster pace. That’s according to “Investing in Digital Assets – Family office and high-net worth investor perspectives on digital asset allocation,” a study by KPMG and Aspen Digital. The investments are still modest percentage-wise, but the Singapore and Hong Kong respondents appear to be dipping their feet with confidence and curiosity. A fine combination. This is bullish for sure. Especially considering the study was commissioned in the middle of a bear market.
Of course, there’s also an admittedly justified fear:
“Family offices (FOs) and high-net worth individuals (HNWIs) have also moved into the digital asset sphere. However, while the digital assets ecosystem presents plenty of growth opportunities, it is still a new, complex and fast-moving market, with a wide range of cryptocurrencies and other digital assets available, as well as a huge array of service providers. With the global regulatory landscape still catching up with the rapid development of the sector, there remains uncertainty around how digital assets will be treated.”
The study’s headline is that “more than 90 percent of our survey respondents already investing in the space or planning to do so,” which is technically right. We decided to go with the precise data in our headline. Besides “prospects of high returns,” the main reason for Singapore and Hong Kong investors deciding to take the risk is “increased participation by mainstream institutional investors.” Which is fascinating. “The report is largely based on a survey of 30 FOs and HNWIs in Hong Kong and Singapore carried out in the second quarter of this year.”
Singapore And Hong Kong Know What’s Going On
The precise data is as follows:
“The survey found that 92 percent of respondents were interested in digital assets, with 58 percent of FOs and HNWIs already investing and 34 percent planning to do so.”
However, and this is important, as we said the investments in Singapore and Hong Kong are still modest percentage-wise:
“Clients and institutions alike are adopting a cautious approach to this emerging asset class. A significant proportion (20 percent) of respondents are allocating 10 – 20 percent of their portfolio to digital assets, but for the majority (60 percent), digital assets make up less than 5 percent of their portfolio. The proportion is likely to remain relatively small, with 40 percent of respondents reporting that they intend to invest 5 to 10 percent of their portfolio in digital assets, while 33 percent say they want the proportion to remain below 5 percent.”
Make no mistake, the king stays king. “All respondents who are currently investing in digital assets own Bitcoin,” the study says, while “87 percent currently hold Ethereum – comprising 19 percent and 20 percent of their digital asset holdings respectively [Figure 5].” It’s also interesting that the Singapore and Hong Kong respondents that are already invested in crypto are curious about NFTs and the metaverse. Those who aren’t “tend to be more interested in cryptocurrencies such as Bitcoin, Ethereum and stablecoins.”
According to Paul McSheaffrey, Partner at KPMG China:
“To increase allocation to digital assets requires related hedging and derivative products to allow investors to manage risk effectively. The development of such products outside of popular tokens such as Bitcoin and Ethereum will help to drive allocation to a wider range of digital assets.”
How Do Those Wealthy Individuals Acquire Cryptocurrencies?
The inaugural Singapore and Hong Kong “Investing in Digital Assets” study also goes into “the top three ways for family offices and HNWIs to gain digital asset exposure.” These are:
- “Centralised or decentralised cryptocurrency exchanges”
- “Cryptocurrency-focused hedge funds”
- “Direct investment in digital asset service providers.”
So, these Singapore and Hong Kong wealthy individuals are taking an extremely conservative approach. However, they’re taking an approach. They’re dipping their feet in the water, and that counts for something.
Featured Image: Screenshot from the KPMG and Aspen Digital study | Charts by TradingView
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