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Hong Kong Unrest: Family Offices Turn to Billionaire Investor James Richman for the Best Asset Diversification Approach

Anti-riot police march into the train stations armed with body armor, tear gas and arms loaded with rubber bullets. Meanwhile, protesters seem to be visibly ready with shields, gas masks and weapons of their own, with clear signs of violence to come.

It is quite unthinkable that such episodes are happening right in the business center of Hong Kong.

However, Latvian-born billionaire investor James Richman is no stranger to tumultuous times. Through his privately-held asset management firm, he made his wealth when his big bets in emerging technologies have paid off massively. Some of the most notable ones include Facebook, Uber, and Tesla — all of which have their own shares of challenging times, too.

Having successfully weathered the financial storm in 2008, many family offices are reportedly turning to the billionaire for his expertise to best protect their wealth. By the looks of it, the political situation in Hong Kong presents a troubling scenario not only in terms of security, but also for businesses longevity.

There are certain periods when forces that can not be overturned exert themselves and ruin existing setups. This also holds true in the world of investments. This is why smart investors and family offices tend to not put their eggs in a single basket.

For billionaire philanthropist, James Richman, his fellow ultra high net worth individuals (UHNWI) clients have long known him as the master when it comes to protecting as well as diversifying assets.

Latvian-born billionaire financier James Richman is one of the few people trusted by many family offices for diversification plans. They turn to him for his expertise in investing, wealth preservation, and asset allocation.

Scenarios like the current unrest in Hong Kong is one of the good examples of when an investor breathes a sigh of relief because he manages to reasonably allocate his or her financial portfolio.

The source of Hong Kong’s turmoil

Meanwhile, the Fugitive Offender amendment bill proposed by the government of Hong Kong is one of the main reasons for the ongoing series of demonstrations in the city. In what organizers call as the Anti-Extradition Amendment Bill or Anti-ELAB movement, the protesters aim to oppose the introduction of the law.

Hong Kong – Tsuen Wan March, 2019 / Wikimedia

The bill, once enacted, is set to give the power to the local authorities to extradite fugitives who are wanted in territories with which Hong Kong does not have extradition agreements.

These areas include mainland China and Taiwan. The idea that Hong Kong would be subjected to mainland Chinese jurisdiction, sparked several concerns among its residents and visitors.

The protesters believe that this would compromise the region’s autonomy and civil liberties. These protests are referred to by the Chinese central government as “the worst crisis in Hong Kong since the handover in 1997.

TST losing its allure

The series of protests that began in June. They started out as simple and peaceful demonstrations. As the demands of the protest groups increased, so did the security interventions. The ongoing protests have been the most violent in the recorded history of the city.

One of the most affected areas in the city is Tsim Sha Tsui, Hong Kong’s prime tourist district. It is more commonly known as “TST” to the locals. It is renowned for its glitz and glamour.

Comprising the establishments there are luxury hotels, gourmet restaurants and designer boutiques. Before, these buildings were crowded by long, zigzag lines of shoppers and were considered one of the strongest tourist attractions of the city.

The crippling effect of the protests

However, this area has now become the venue for protests. It has been for more than four months. The results are smashed windows, vandalized walls and structures, and very bad business.

Key infrastructure has also been hampered on occasion. The city’s transportation veins like tunnels, highways and even the subway trains have halted operations at times. Even Hong Kong’s international airport was caused to cease operation during rampant protests.

Tourism accounts for 5% of the city’s GDP. It is also regarded as one of the “Four Key Industries” by the city’s government. The beleaguered industry has now taken a massive hit.

The Hong Kong Tourism Board recently released initial figures regarding the effects of the protests. It revealed that the number of arrivals during the first half of August decreased by a double-digit percentage, as compared to the same period of 2018. The total of bookings for September and October has also dropped tremendously.

The board says there are other factors that account for this, but they do not deny the travel warnings issued by major countries, including Australia and the US.

Tourism relations with China have been closely observed by officials as it accounts for around 80% of the city’s tourists. The protests entail an anti-Chinese attitude which damages the relations further.

Accounts disclose of a Mainland citizen who was suspected of being an undercover police officer, as well as a reporter of a government newspaper who was targeted by protesters. They were reportedly held hostage, assaulted and abused for several hours.

Alleviating risks

Businesses are still dazed from the damages brought by the protests. Although most are insured, policies are seldom covered by social unrest.

Meanwhile, many Hongkongers have already reportedly sold some of their property assets at massive discounts to flee the ongoing unrest. As investors, these are factors that must be looked into. Such events are almost impossible to predict, but they do take place, unfortunately. It further solidifies the need for diversification and comprehensive risk assessment.

This will somehow, suppress impending losses which the businesses will have to shoulder.

 

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