Private banking giant Julius Baer expects Asia to play a major role in its growth in the near term as investors seek diversification amid US AI risks, according to its chief executive.

“The AI bubble is building and lots of people are very nervous about how much AI risk they have,” Julius Baer group CEO Stefan Bollinger said in an interview in Hong Kong on Tuesday.

Investors who have long been “over-indexed” to the US dollar and US equities now face increased exposure, as AI-related capital expenditure in the US reaches traditionally diversified sectors, according to Bollinger.

“If you invest in real estate in the US, you’re investing in data centres. If you invest in energy infrastructure, AI-related demand is becoming a significant driver,” he said.

“If you invest in bonds, many of the largest issuers are financing AI-related capex,” Bollinger said. “There is more AI exposure in portfolios than many investors realise.”Asia therefore presents opportunities for Julius Baer’s clients to diversify their investments and currency allocation, according to the executive.

The valuation gap between US and Chinese technology is “very significant”, while “having some renminbi is for sure a good idea” for clients who have “too much dollar”, he said.

As rising geopolitical tensions force global banks and asset managers to reassess their strategies, bankers speaking at the Global Financial Leaders’ Investment Summit in Hong Kong on Tuesday highlighted the Asian financial hub as a key hub for portfolio diversification.

Traditional safe haven assets, such as gold and US treasuries, have had a “patchy” track record in protecting portfolios in a “gut-wrenching” year to date, Julius Baer equity analyst Jen-Ai Chua wrote in a research report published on Monday.

That, along with the rise of geopolitical tensions and an “erosion of US institutional credibility”, has contributed to a “reframing” of safe havens as jurisdictions, according to Chua.

Hong Kong and Singapore, with strong governance and institutional stability, are well positioned to capitalise on this shift, the report said.

“We think strongly that Asia is still one of the fastest growing regions in the world,” Julius Baer Asia head Jimmy Lee Kong Eng said in the joint interview with Bollinger.

Earlier this year, Hong Kong for the first time overtook Switzerland as the world’s largest cross-border booking centre, with offshore wealth booked in the city last year reaching US$2.95 trillion, narrowly beating Switzerland’s US$2.94 trillion, Boston Consulting Group (BCG) said in a report in May.

A surge in initial public offerings and capital inflows from mainland China drove Hong Kong’s rise as a wealth hub, BCG said.

“Hong Kong has the big advantage of having mainland China in its backyard and all the growth is coming from there,” Bollinger said. “If you look at all the big trends, whether it’s AI, robotics or biotech, China is playing an increasingly important role in driving innovation and growth.”However, Lee added that while capital was flowing into Hong Kong and Singapore, Asian money was also seeking diversification in markets like Switzerland.

Zurich, Switzerland-based Julius Baer, one of the world’s largest private banks, had 546.7 billion Swiss francs (US$666.4 billion) under management by June this year, with 5.7 billion Swiss francs in net new money (NNM). NNM, a major metric for private banking growth, measures the net inflow of client assets.

The company is targeting a 4 to 5 per cent annual growth in NNM by 2028, according to its online financial disclosures. While the firm does not break down regional NNM contributions, “Asia is a big part of it”, Bollinger said.

Its Hong Kong operation, established in 2006, is one of its two international booking centres in Asia and now has more than 500 employees. Anticipating growth in Asia, the company is seeking to hire “as many talents as we can find that meet our quality standards”, Bollinger said.