China’s rich skirting Hong Kong to seek asset safety elsewhere

- Advertisement -
- Advertisement -
- Advertisement -
- Advertisement -

Rich Chinese are expected to park fewer funds in Hong Kong on worries that Beijing’s proposed national security law for the city could allow mainland authorities to track and seize their wealth, bankers and other industry sources said.

More than half of Hong Kong’s estimated private wealth of over $1 trillion is from mainland individuals who have parked money there, according to bankers.

The city has benefited from its proximity to China and separate legal system, as well as its dollar-pegged currency, but there are now worries about it losing its edge as a global financial centre due to capital and talent flight.

Interviews with half a dozen bankers and headhunters have revealed that some Chinese clients are looking for other hubs as their main offshore wealth base with Singapore, Switzerland and London high on the list.

One Chinese client who had been scouting investments in Hong Kong instead bought five apartments this week in Singapore via a newly set up family office, said the person’s adviser with a European wealth manager.

“Singapore has been on their radar for a while now, but Hong Kong has been the default booking centre for them,” said the Singapore-based banker, who, like his industry colleagues, declined to be identified due to sensitivity of the matter.

He said his bank had begun receiving inquiries from Chinese high net worth individuals (HNIs) about opening accounts outside Hong Kong.

“Chinese HNIs like the law from the perspective of their love for the Chinese flag, but not from their asset protection perspective.”

In another example, the founder of a Hong Kong-based boutique wealth manager focused on helping Chinese clients set up family offices said his firm was in partnership talks with two Dubai-based banks after receiving inquiries about setting up investment vehicles there.

The expected shift has led some wealth managers to tap corporate recruiters to help hire Mandarin-speaking client advisers in other locations including Singapore and Switzerland, said the sources.

SECOND IN WEALTH

Globally, Hong Kong ranked second in wealth per adult after Switzerland in mid-2019, and 10th in the number of people with more than $50 million in assets, according to a Credit Suisse report.

The city competes with Singapore to be considered Asia’s premier financial centre. Global private banks including Credit Suisse, Julius Baer and UBS, as well as Asian wealth managers have operations in both hubs.

A planned law last year that would have allowed extradition to China from Hong Kong was shelved after months of increasingly violent protests, but it sent shivers through the city’s wealthy who feared Beijing could have used it to freeze assets. Some went so far as to move funds.

Now the proposed security law is triggering concerns about the semi-autonomous city’s freedoms and particularly, the legal protections it offers.

The specifics of the new bill remain unclear. It is meant to tackle secession, subversion and terrorism and it could see Chinese intelligence agencies set up bases in Hong Kong.

China has previously targeted mainland citizens in Hong Kong, mostly as part of corruption investigations, but there hasn’t been a large public seizure of assets in the city.

“Now, it may just be that there will be more of a process around these things (after the imposition of the law),” said a wealth manager, whose firm manages over $200 billion in assets.

This article was originally published on finance.yahoo.com/news/.

Home of Science
Follow me

- Advertisement -

Discover

Sponsor

Latest

American companies spent years in an economic boom. Then the coronavirus hit

KEY POINTS The coronavirus pandemic has forced many U.S. companies to reverse expansion plans they had at the start of the year. Job losses...

Building Greatness: 19-Year-Old Ariel Levy is on the Heels of the Best Sports Agencies

The now 19-year-old Levy has brought the lessons learned from his younger years of off marketing to the table. Levy’s age may at first...

Shows That Have Had Their Time in the Hot Seat

In the years since the last report, there have been so many hot shows that have come out. In fact, the shows that were...

The Secret by Priyank Chopra

Priyank Chopra is an author, speaker, and entrepreneur. He has spoken for the United States Congress and for the U.N. He is the author...

Iranian fuel reaches Venezuelan stations as prices set to rise

Fuel shipped from Iran began arriving at Venezuela's gasoline stations on Saturday, just hours before President Nicolas Maduro announced higher prices at the pump...
Home of Science
Follow me