Asian business owners and family offices are piling into US equities and real estate    

SINGAPORE - More Asian business owners and large family offices are increasing their allocations to US equities and real estate, fuelled by optimism over US President-elect Donald Trump’s pro-business policies. 

As a result, they are seeking help to structure their US investments and address any tax compliance issues ahead of Trump’s inauguration, scheduled on Jan 20, 2025.

While the S&P 500 US stock market index has been tempered in recent days by inflation concerns, it remains near record highs and is up more than 20 per cent this year.

According to the latest Global Fund Manager Survey from Bank of America, respondents were more optimistic after the US election, which took place on Nov 5.

Allocations to US equities surged post-election to the highest level since August 2013, with investors holding 29 per cent of the asset class, compared with 10 per cent in October.

Some 43 per cent said they expect US equities to be the best-performing asset class in 2024, compared with 27 per cent of respondents pre-election.

“A number of our clients are allocating more of their assets to US real estate and equities because one of the core fundamental tenets of what Trump wants to do is reduce the corporate red tape as well as corporate tax rate from 21 per cent to 15 per cent,” said Mr Kurt Rademacher, partner and head of US private client at international law firm Charles Russell Speechlys. 

“That’s going to help corporate earnings after tax, which could drive up stock prices. If businesses are doing better, there’s more money in people’s pockets. That would potentially also increase the real estate market as a rising tide lifts all boats.”

Within the first eight trading days since the US election results, the market value of US equities increased by US$2 trillion (S$2.7 trillion), or 3 per cent. The US dollar gained 3 per cent against an index of the most liquid currencies.

Mr Rademacher, who splits his time between Singapore and the US, said regional clients are seeking help to structure their US investments and address any US tax compliance issues. 

The seasoned professional in international wealth transfer planning told The Straits Times that in Asia, many of the ultra high-net-worth (UHNW) families from China, Indonesia, Taiwan and the Philippines have some US connections. Most of them have children studying there, are working on Wall Street or are married to an American. 

“We step in and try to manage the tax situation for them. For those few clients in the region who don’t have US family members, they all have US equity exposure or US real estate exposure, and they too need advice,” Mr Rademacher said.

A lawyer with another law firm also shared that he has been kept busy handling inquiries from wealthy clients who want to invest in the US, leveraging Singapore family offices as an investment vehicle to do so. 

Charles Russell Speechlys’ head of private office Marcus Yorke-Long said Trump’s victory provides direction, which in turn underpins investor confidence as there is now an element of predictability that can be applied to global markets and geopolitics. 

“Mr Trump has a very strong voice, and he now also has a very strong mandate. Investors and families tend to find it somewhat easier to plot their path when there are elements of conviction and direction as opposed to uncertainty and mixed messages,” said Mr Yorke-Long, whose team handles relationships with global families seeking broad conversations across sectors, territories and generations.

Political change provides an opportunity for UHNWs to review their global structures and tax mitigation strategies, Mr Yorke-Long said.

Mr Rademacher said individuals who have not filed their US income tax returns should do so promptly, as the Internal Revenue Service is ramping up efforts to pursue non-filers.

He added that Singaporeans who have China-centred manufacturing business can expect a period of uncertainty and chaos.

This is because Trump has announced his intention to impose a blanket tariff ranging from 10 per cent to 20 per cent on all imports, along with additional tariffs of at least 60 per cent on products imported from China.

Goldman Sachs expects the US to impose additional tariffs averaging 20 per cent on Chinese products in the first half of 2025. 

“There are lots of questions about whether Trump really wants a 60 per cent import duty, or whether what he really wants is a free trade agreement with China, or freer trade agreement with China.

“But there will be a period of time when that’s going to be difficult for Singaporean clients with Chinese businesses in the manufacturing sector,” said Mr Rademacher.

Even allies of the US may be affected by Trump’s tariff-fuelled war as global trade remains strongly intertwined with the US and Chinese economies.

Allianz Trade, an insurance group, said rising US-China tensions are reshaping global supply chains and paving the way for new trade powerhouses. It identified 25 economies that could benefit from this new world order.

“Beyond fast-growing economies such as India, this shift has opened doors for nations like Vietnam, Malaysia, Indonesia, and the United Arab Emirates to step up as next-generation trade hubs,” Ms Francoise Huang, senior economist for the Asia-Pacific and trade at Allianz Trade said.

For everyone else with US connections, they should be better off from a pure tax policy perspective, Mr Rademacher said.