The Chinese territory is expected to welcome about 200 high-net worth individuals in 2024, after five years of millionaires skipping town. — The Straits Times
HONG KONG: Hong Kong is winning back wealthy Chinese by rolling out the red carpet for the rich, while rival Singapore scrutinises foreign money.
The Chinese territory is expected to welcome about 200 high-net-worth individuals in 2024 after five years of millionaires skipping town, according to data provided by intelligence firm New World Wealth and immigration consultancy Henley & Partners, thanks to initiatives including family office tax concessions and visa and residency programmes.
At the same time, the fallout from a massive S$3bil money laundering case has put Singapore’s family offices and wealthy immigrants under the microscope.
It is a shift from the lockdown years, when Hong Kong’s strict quarantine and political upheaval led to mainland Chinese flocking to Singapore.
Private bankers, service providers and insurers have said Hong Kong business is picking up, while Singapore’s stepped-up money laundering rules are putting some customers off.
Hong Kong’s assets under management grew 2.1% to HK$31trillion in 2023.
Driven by a strong performance in private banking and wealth management, net fund inflows jumped more than three times to nearly HK$390bil in 2023, Financial Secretary Paul Chan wrote in July.
In 2022, private banking and wealth fund inflows slumped by about 80%.
In Singapore, the fallout from the money laundering case means some banks are re-doing their know-your-customer process, and rich Chinese in Singapore are under the microscope, according to two private bankers.
Their clients are frustrated with the process and the questions being asked, they said.
In April, the Monetary Authority of Singapore introduced a digital platform to share customer information to combat money laundering.
Since then, a service provider in Hong Kong said it has received more than 15 inquiries from wealthy Chinese seeking to move or set up family offices in the city.
Half of those inquiries already resulted in actual business, they said.
“For many of the mainland billionaires, because they don’t like the arbitrary government interventions, government checks or threats to their personal wealth, that’s why they wanted to move money out of China,” said Dr Chen Zhiwu, professor of finance at the University of Hong Kong.
“If Singapore would do as many checks and have tighter regulations as the mainland, then why would they want to go there?”
Dr Chen said he knows billionaires who have “warmed up” to basing more of their family office business in Hong Kong as their enthusiasm for Singapore has waned.
In Hong Kong, business at the China desks of private banks has picked up while the pace of growth at the same groups in Singapore has slowed, meaning less money is moving to Singapore, according to two senior private bankers.
Hong Kong has benefitted from the reopening of its borders in 2023.
The city has efficient connections to Shenzhen and the surrounding Greater Bay Area via its high-speed rail line.
That is attractive for wealthy Chinese who want to be able to closely monitor onshore businesses.
“Despite the political changes in Hong Kong and a number of challenges associated with that, there remain meaningful reasons for wealth and business owners to develop and maintain connections the to Chinese territory,” said Philip Marcovici, who consults with global families and financial institutions on wealth and taxation.
The city’s introduction of the top talent visa programme targeting high-income earners and university graduates is paying off, with more than 68,000 applications approved since its introduction in 2022. Ninety-five percent of those are from mainland China, according to government data.
One of the recipients is Wang, a tech worker from Chongqing in southwest China.
Having a Hong Kong identity card allows him to travel more easily to the United States and other places for work, he said.
Many of his friends were worried about the future direction of Chinese government policy during the lockdowns and sought residence elsewhere, looking for more neutral ground amid rising geopolitical tensions.
While there is a narrative that Hong Kong is becoming more like China, he said it remains more open, particularly for capital flows.
“Hong Kong is still a good place for business people,” he said, particularly “if you want to travel a lot or move your money freely”.
According to the two senior private bankers, revenue in Hong Kong already grew by double digits in 2024, driven by Chinese clients.
Most clients have assets of US$5mil to US$10mil and are not in the ultra-rich category, another private banker said.
It is still difficult for Chinese nationals to move money offshore, and billionaire wealth creation is hampered by a sluggish market for initial public offerings in Hong Kong. — The Straits Times/ANN
