SINGAPORE: Hong Kong is drawing high-net-worth individuals (HNWIs) from mainland China, a significant reversal from recent years when political unrest and stricter regulations led many to relocate to Singapore.
The Edge Singapore reported that recent data from New World Wealth and Henley & Partners indicates that approximately 200 HNWIs are expected to move to Hong Kong this year, enticed by new tax incentives and tailored residency programs for family offices.
Rich Chinese return to Hong Kong as Singapore steps up scrutiny
In contrast, once a magnet for Chinese wealth, Singapore is stepping up with revamped anti-money laundering measures following a high-profile $3 billion laundering scandal.
These regulatory changes have sparked frustration among wealthy Chinese residents and prompted some to reconsider their financial base.
Hong Kong’s financial landscape has experienced a revival, with assets under management swelling to HK$31 trillion (S$5.36 trillion) in 2023, driven notably by a strong private banking sector and a threefold increase in net fund inflows.
Private bankers, speaking anonymously to Bloomberg News, attribute this rebound to Hong Kong’s strategic geographical positioning and improved business environment post-border reopening in 2023.
Efforts to attract talent, such as the top talent visa program launched in 2022, have proven successful, with over 68,000 applications approved, predominantly from mainland China.
However, many people grew concerned about where the Chinese government policies were headed during COVID-19, prompting them to seek residence elsewhere amid geopolitical tensions.
Nonetheless, for individuals like Wang, a tech worker from Chongqing, holding a Hong Kong identity card facilitates easier international travel and financial operations, factors that continue to attract business-oriented individuals.
Meanwhile, Singapore’s response to the money laundering scandal has led to intensified scrutiny of Chinese wealth.
The Monetary Authority of Singapore’s introduction of a digital customer information-sharing platform has received mixed reactions, with some private bankers noting increased reluctance among clients facing scrutiny.
Zhiwu Chen, a professor of finance at the University of Hong Kong, said:
“For many of the mainland billionaires, because they don’t like the arbitrary government interventions or government checks or threats to their personal wealth, that’s why they wanted to move money out of China.”
“If Singapore would do as many checks and tighter regulations as the mainland, then why would they want to go there?” he added.
According to Mr Chen, he knows of billionaires who have “warmed up” to set up their family office operations in Hong Kong as their enthusiasm for Singapore has waned.
Hong Kong-based private banks are experiencing robust growth compared to their Singapore counterparts.
Sales of insurance products popular among wealthy mainland Chinese surged by 63% in Hong Kong during the first quarter of this year.
Despite these gains, Hong Kong’s attractiveness remains tempered by challenges such as limited offshore wealth mobility and a sluggish IPO market, which may influence future investment decisions among the ultra-rich.
Looking ahead, Hong Kong’s newly launched residency plan, offering residency to those investing HK$30 million, has attracted over 340 applications since its March inception, wrote Financial Secretary Paul Chan. The residency plan will likely bring more than HK$10 billion to Hong Kong.
According to Henley & Partners, Singapore ranks third globally as a popular destination for migrating millionaires, expecting to welcome a net 3,500 millionaires this year.
Hong Kong, on the other hand, is forecasted to rebound after a decline of about 500 due to migration in 2023, as noted by Andrew Amoils, head of research at New World Wealth, Henley’s research partner.
“Despite a tough past decade, Hong Kong is still one of the world’s top millionaire hubs,” he said. /TISG
Read also: Singapore aims to attract future industry leaders, not just high-net-worth individuals
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