Some of Asia’s wealthiest families are squirreling away dollars as a haven from the volatility plaguing financial markets, providing another source of demand for the greenback.
Rich individuals are chasing the greenback’s rally to a decade-high as the U.S. prepares to raise interest rates for the first time since 2006. According to Stamford Management Pte in Singapore, which oversees $200 million for Asia’s multi-millionaires, about 90 percent of its holdings are now in the U.S. currency.
“The U.S. dollar has moved relatively quickly, and that left a lot of high-net-worths behind,” Jason Wang, Stamford’s Singapore-based chief executive officer, said Wednesday in an interview. “Non-professional investors are not usually the first movers or innovators of a major trend, so there’s still a lot of pent-up demand.”
Analysts believe that markets are becoming more dangerous, particularly for smaller investors, with geopolitical turmoil from the Middle East to Ukraine combined with surprise policy announcements in the euro region, Switzerland, Singapore and Canada. With the U.S. economy outperforming its developed-world peers, the dollar is increasingly viewed as the best antidote to the increase in risk.
Asia’s importance to the global economy has been increasing for some time, with the region’s developing nations accounting for 39 percent of global growth last year, compared with the European Union’s 30 percent and 22 percent for the U.S., according to the International Monetary Fund. The proceeds of that growth are increasingly being plowed into dollar-denominated assets.