Sun Hung Kai Capital Partners teams up with Julius Baer’s unit in alternative investments

A subsidiary of Sun Hung Kai & Co (SHK&Co) has teamed up with a unit spun off from the Swiss private bank Julius Baer to manage and distribute alternative investments in Greater China, amid rising demand for diversity in financial services.

Sun Hung Kai Capital Partners, a unit of the financial services company founded by the tycoon Fung King-hey, has announced a strategic partnership with GAM Investments, which offers a range of alternative investment strategies including commodities, the macroeconomy and currencies.

“This strategic alliance combines our complementary strengths and resources, significantly improving our client service and investment solution capabilities,” said SHK&Co’s deputy CEO Tony Edwards. “Together, we are well-positioned to provide exceptional offerings that cater to the evolving needs of our clients in the region.”

The alliance will launch an alternative wholesale investment product later this year for family offices and institutional investors, Edwards said, without divulging details.

The global market for alternative investments soared to a peak of US$1.71 trillion in 2021, as the era of zero interest rates and cheap funds was drawing to a close, according to data from JPMorgan. The market shrank 25.4 per cent last year from the peak as central banks raised interest rates to rein in inflation. Still, alternative assets are essential to help investors diversify their portfolios and income sources, as well as reduce the volatility in their investments.

GAM was spun out of Julius Baer and listed in 2009 on the SIX Swiss exchange, with 63.8 billion Swiss francs (US$72.2 billion) in assets at the end of last year, according to the company. Its assets comprised 42 per cent in fixed-income products, 31 per cent in multi-asset products, 22 per cent in equities and 5 per cent in alternatives.

Allocations to alternatives could grow significantly, GAM’s chief executive Elmar Zumbuehl said, and the partnership with SHK&Co could help develop products for global investors.

SHK&Co shares a name with Hong Kong’s largest property developer, reflecting the shared heritage when Fung, Kwok Tak-seng and Lee Shau-kee founded the group in 1969. Sun Hung Kai Properties was listed separately in 1972 and has been controlled by the Kwok family since then.

SHK&Co’s loss narrowed by 69 per cent last year to HK$471.4 million (US$60.3 million), from HK$1.53 billion a year earlier, due to a smaller impairment in its investment management division. Its stock rose 0.8 per cent on Thursday in Hong Kong to HK$2.51.

“Investors now are looking more at the global opportunities offered locally,” said Zumbuehl. “The demand for assets is stronger than ever.”

Looking ahead, Zumbuehl highlighted that the alliance sees Hong Kong as an important spot to be “client centric” to cover the Greater China market despite China’s slower-than-expected economic recovery.

“China will continue to be the leading, dominant economy,” said Zumbuel. “Today, everyone is involved in an arms race to dominate Al [artificial intelligence] or to produce new chips, and in the middle, it’s China’s dominance in the green economy.”