Didier Von Daeniken

'It is true that we steered clear of technology funds and that our clients have suffered less than those of the American banks in the market downturn,' says the quietly spoken head of CSPB in Singapore, Didier Von Daeniken, who ran the Dubai representative office in the late 1990s and visited Dubai this week as a speaker at the e-Bank 2002 conference.

'We were the first major bank to push clients into hedge funds and alternative investments in 1999 to preserve capital. And it is fair to say that a large part of these products have fulfilled the expectation of preserving capital, even if the actual capital gains have not been as much as people hoped'.

So where is Mr. Von Daeniken recommending his clients to invest right now?

'Capital preservation is the key in these markets,' he replies. 'That means holding cash, bonds to some extent and all kinds of capital protected products. There are also hedge funds as an asset class. But you have to be careful to take advice from somebody who understands them and to stick to the first quartile of funds'.

Mr. Von Daeniken is also keen on certain opportunities in Asia, ex-Japan, where he believes the 1998 financial crisis purged the system of many bad companies, although the ones left behind are now dogged by poor country ratings.

'Some companies are doing well with strong cash flow and sound balance sheets,' he says. 'Take for example Indofood of Indonesia which recently issued $240 million in bonds yielding 9.75-10.25%. This is typical of a group with strong cash flow and a good yield'.

'But the important thing today is to realize that the right advice is more and more important. Equity markets have generally been very good in Asia this year, and some emerging markets offer good value. But you need to constantly monitor your exposure to avoid the next Brazil or Argentina'.

'International investors have ignored Asia in the bubble years of the US and UK markets. However, any weakness in dollar markets will impact on places like Taiwan and Singapore, though less so on Thailand and Indonesia.'

On the other hand, the 39-year old CSPB high-flyer is nervous about US and UK real estate markets, and sees a bubble building up rather like the Internet share boom.

'We have been in a totally different economic cycle since 2000, with low interest rates and low inflation,' he notes. 'A whole generation has seen a bull market in property, but you do not have to go back very far to see the last collapse in the early 1990s'.

'And then it took five to seven years to recover its previous heights. In Japan property has been falling in value for 10 years, despite the general shortage of land '.

For CSPB in Singapore the past three years have been surprisingly good times with the branch expanding from around 70 to 250 staff, becoming one of the three largest outside Switzerland.

'Singapore has very strong banking secrecy laws, like Switzerland,' explains Mr. Von Daeniken. 'It is also a major financial centre with about 600 financial institutions. Moreover the Singapore dollar has enjoyed remarkable currency stability over the years just like the Swiss Franc'.

Could the Dubai International Centre ever attract the same kind of credibility?

'Actually I think Dubai does have a very good chance of becoming a major financial centre,' says Mr. Von Daeniken. 'It depends on two factors: the political environment of the Middle East, which is worrying to investors at the moment; and the regulatory authority's ability to inspire confidence among international investors'.

'I believe Dubai can overcome the second challenge but the first hurdle is largely out of its control and will depend on what happens in the region. Whether Dubai then becomes more of an offshore banking or international financial centre is also not yet clear, but at CSPB we are certainly monitoring developments very closely'.

In the meantime, CSPB has combined its Internet Banking Service with a personal investment adviser that provides Middle East investors 24-hour access to its services in Singapore. The only drawback is that you need to have more than $1 million in investable funds to become a client.