HONG KONG: Global investors struck a bullish tone on the private credit market at Bloomberg’s Invest Hong Kong event yesterday, shrugging off fears that have swirled around the sector since last year.
Senior executives at BlackRock Inc and Granite Asia Capital said they remain optimistic about the US$1.8 trillion market, stressing its ability to diversify portfolios that are otherwise exposed to stocks and bonds.
“Portfolios of the traditional 60/40 are not going to generate the outcomes that we’re going to need for the future,” said BlackRock’s head of Asia-Pacific, Susan Chan.
“This is why private markets are becoming such an incredibly powerful asset class within the longer-term portfolios.
“Because you need it, and it fits very nicely in so many ways.”
It was the latest example of big global funds drawing a line under the fears that engulfed the sector since last year, after the high-profile blow-ups of First Brands Group and Tricolor Holdings fuelled talk of “cockroaches” in the credit market.
Arcmont Asset Management’s Anthony Fobel said earlier this week that investor interest in the sector remains strong despite gloomy press reports.
The backdrop for the discussions was artificial intelligence (AI), which has generated staggering moves in stock prices, fuelled talk of the biggest initial public offerings (IPOs) in history – and caused a few market shocks as investors reacted to China’s DeepSeek and cybersecurity risks from Anthropic’s Mythos model.
“If anything, I would say private credit is probably a better asset if you’re looking at Asia, because it helps to capture not just AI or tech-native companies but also the transformation” of more traditional companies, said Jenny Lee, senior managing partner at Granite Asia.
Some of the speakers were asked where they would invest if they had US$100,000.
Lee picked key sectors that only a few years ago would have seemed more in the realm of science-fiction than conventional investing: quantum computing, nuclear energy and computing in space.
Mingchen Xia, co-head of Asia investments at Hamilton Lane, said he would put half of his portfolio in private markets, including a large allocation to the United States.
It wasn’t all about private markets. Apollo Global Management’s new Asia-Pacific head Eiji Ueda focused most of his remarks on the opportunity from demographics across Asia.
He said the region’s ageing population will create demand for retirement products, while fast-growing economies continue to generate significant financing needs. — Bloomberg
