Banking giant HSBC has said that the world’s wealthiest people are moving their money into cash rather than stocks and bonds. The head of the Swiss private banking unit of HSBC said this was due to growing concern over the increasingly unstable economy.
“The first half of 2008 has seen a notable change in client expectations and investment choices," said Peter Braunwalder, chief executive of HSBC Private Bank (Suisse). "Faced with inflation worries, volatile asset prices and sudden changes in exchange rates, a majority of investors have reduced their transaction volumes in equities, bonds, and structured products.”
Braunwalder said this was particularly true for clients from Asia who have changed their investment strategies due to the volatile market.
"Concurrently, most clients increased their cash allocation and, for some, their leverage," he added.
The bank admitted that it was experiencing "the most difficult financial markets for several decades". Assets under management decreased by 13% to $21.7 billion compared to December 2007, in part due to the unstable market. "Record levels of volatility across asset classes and markets have made clients more hesitant to move their assets between financial institutions," the bank said.