9-7-2024 (HONG KONG) In a striking reversal of fortune, Hong Kong is experiencing a resurgence in attracting affluent Chinese individuals, while its long-standing rival, Singapore, grapples with increased scrutiny of foreign wealth. This shift marks a significant turnaround for the former British colony, which had previously seen an exodus of millionaires due to political unrest and stringent pandemic measures.
According to projections from New World Wealth and Henley & Partners, Hong Kong is poised to welcome approximately 200 high-net-worth individuals in 2024, following a five-year period of declining millionaire populations. This influx is attributed to a series of enticing initiatives, including tax concessions for family offices and revamped visa and residency programmes.
The city’s Financial Secretary, Paul Chan, reported a 2.1% growth in assets under management, reaching HK$31 trillion (S$5.3 trillion) in 2023. Notably, net fund inflows surged more than threefold to nearly HK$390 billion, primarily driven by robust performance in private banking and wealth management sectors.
Contrastingly, Singapore’s financial landscape has been rattled by a massive S$3 billion money laundering scandal, prompting heightened scrutiny of family offices and wealthy immigrants. This development has led to a recalibration of risk assessment procedures within Singapore’s banking sector, with some institutions revisiting their know-your-customer processes.
Dr Chen Zhiwu, professor of finance at the University of Hong Kong, noted, “Many mainland billionaires initially sought to move money out of China due to concerns over arbitrary government interventions. If Singapore implements checks and regulations as stringent as those on the mainland, it may lose its appeal.”
Hong Kong’s resurgence is further bolstered by its geographical advantage and efficient connections to the Greater Bay Area. The city’s top talent visa programme, introduced in 2022, has already approved over 68,000 applications, with 95% originating from mainland China.
The financial services sector in Hong Kong is reporting significant growth, with private bankers indicating double-digit revenue increases in 2024, primarily driven by Chinese clients. Sales of insurance products, popular among wealthy mainland Chinese, saw a remarkable 63% jump to HK$15.6 billion in the first quarter of 2024 compared to the same period in 2023.
However, Hong Kong’s renewed popularity is not without challenges. The city’s investment-linked residency programme has raised eyebrows, with a significant number of applications coming from countries known for cash-for-residency schemes that have been exploited by financial criminals in the past.
Dr Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, expressed concerns about potential money laundering risks associated with these applications.
Despite these concerns, Andrew Amoils, head of research at New World Wealth, remains optimistic about Hong Kong’s trajectory. “Despite a challenging past decade, Hong Kong remains one of the world’s top millionaire hubs,” he stated, emphasising the visible turnaround in the city’s fortunes.
