Mideast investors favor emerging debt, gold: J. Baer

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DUBAI: Yield-seeking Middle East investors are chasing exposure to emerging markets amid a low interest rate environment in more developed nations, an official at Swiss private bank Julius Baer told Reuters.

"Clients are still looking for some yield and yield will normally not be achieved through traditional investments or fiduciary deposits. Emerging markets offer these opportunities to quite some extent," said Peter Schaer, managing director and chief executive for the bank’s Middle East operations.

Within emerging markets, clients are looking for exposure mainly to China, India and other Asian markets, the executive said in an interview.

Risk aversion stemming from the global financial crisis is also forcing investors to opt for the safety of gold and fixed-income products in the emerging market space, he added.

Investment demand for gold has risen this year as concerns over the global economy, the stability of financial markets and the outlook for currencies boost buying of the metal as a safe store of value.

"They (investors) are looking at some investments in precious metals, gold for instance. That can be in physical or in solutions or products that are created with precious metals," said Schaer, who joined the bank this year from Swiss bank giant UBS.

Julius Baer, which has over $150 billion in assets under management, continues to expand its operations in the region and attract new client assets despite the challenging economic backdrop, it said.

Schaer declined to provide details of total assets managed from the region or elaborate on the bank’s client base.

The bank is seeking "targeted" new hires and is looking at managers who have specific knowledge or access to certain client segments within the region, he said.

"We can say that we have continued to grow the business in terms of new hires, very targeted new hires," Schaer said. The bank said this month it aims to double its Asian assets to 20-25 percent of its total in five years as it recruits new staff and opens more offices in the fast-growing region.

Global private banks are increasingly turning their eyes to Asia, where — with the exclusion of Japan — wealth is expected to grow at nearly twice the global rate, according to the Boston Consulting Group.

"The growth is very much also here in this part of the world, whereas currently Asia is growing faster. But that doesn’t mean we cannot catch up over the next few years," Schaer said.

Julius Baer, Switzerland’s third-largest wealth manager after Credit Suisse and UBS, emerged strongly from the financial crisis. Its Tier-one capital ratio stood at 22.8 percent at the end of June, giving it ample room to grow its business aggressively.


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By Reuters
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