Hong Kong is welcoming back its wealthy Chinese residents with open arms. After years of millionaires leaving the city, about 200 high-net-worth individuals are expected to return this year. This wealth comeback is due to new initiatives like family office tax concessions and visa and residency programs.
Red Carpet for Wealth Comeback
In recent years, many wealthy Chinese had moved to Singapore due to Hong Kong’s strict quarantine measures and political upheaval. Now, private bankers, service providers, and insurers are noticing a shift. Hong Kong’s business is picking up while Singapore’s tighter money laundering rules are making some customers uncomfortable.
Hong Kong’s financial landscape is also improving. In 2023, assets under management grew by 2.1%, reaching HK$31 trillion (S$5.4 trillion). Private banking and wealth management performed well, with net fund inflows increasing more than three times to nearly HK$390 billion. This was a significant recovery from 2022, when private banking and wealth fund inflows dropped by about 80%.
Under the Microscope
Singapore is experiencing a shift due to a major S$3 billion money laundering case.
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This has led to banks redoing their know-your-customer processes, frustrating many rich Chinese residents. The Monetary Authority of Singapore has introduced a digital platform to share customer information to combat money laundering. As a result, some wealthy Chinese are looking to move or set up family offices in Hong Kong instead.
For many mainland billionaires, government checks and interventions in China are a concern. They want to move their money to a place with fewer restrictions. Some billionaires are now more interested in Hong Kong because Singapore is becoming stricter with its regulations. Business at the China desks of private banks in Hong Kong is picking up, while the growth rate at similar groups in Singapore is slowing down.
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Hong Kong’s borders reopened in 2023, which also helped. The city’s high-speed rail line offers efficient connections to Shenzhen and the Greater Bay Area. This is attractive to wealthy Chinese who want to monitor their onshore businesses closely.
Despite the political changes and challenges in Hong Kong, there are still many reasons for wealth and business owners to maintain connections to the city. Hong Kong introduced a top talent visa program targeting high-income earners and university graduates, resulting in more than 68,000 approved applications since 2022. Most of these applicants are from mainland China.
Wealthy Immigrants and Business Growth
Hong Kong remains a good place for business, particularly for those who travel frequently or need to move money freely. Revenue in Hong Kong has already grown by double digits this year, driven by Chinese clients. Most of these clients have assets between $5 million and $10 million, according to a private banker.
Moving money offshore is still difficult for Chinese nationals, and the sluggish market for initial public offerings in Hong Kong hampers billionaire wealth creation. However, Chinese money that previously went to Singapore is now heading to Hong Kong. Data shows that sales of insurance products popular with wealthy Chinese from the mainland jumped 63% to HK$15.6 billion in the first quarter compared to the same period in 2023.
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In June 2021, the Hong Kong government established the Family Office Hong Kong team to promote the city’s wealth management industry. Since then, about 64 family offices have been established or expanded their business, with 49 coming from the mainland.
However, the money laundering scandal in Singapore has raised concerns in Hong Kong. Some worry that the new arrivals may have something to hide. A residency plan in Hong Kong offers people who invest HK$30 million the chance to stay in the city. This plan attracted over 250 applications between March and May. Nearly 200 of these applicants are from countries where cash-for-residency programs have been linked to financial crimes.
Hong Kong’s financial secretary reported in his blog that more than 340 applications have been received for the residency plan since its launch. If approved, these applications could bring more than HK$10 billion to Hong Kong.
Singapore remains a popular destination for millionaires, with a net forecast of welcoming 3,500 millionaires this year. However, Hong Kong’s millionaire population is also expected to rebound after losing about 500 to migration in 2023. Despite the challenges of the past decade, Hong Kong remains one of the world’s top hubs for millionaires and is experiencing a significant turnaround.
