More than $75 billion could exit Hong Kong as a result of recent U.K. policy allowing almost three million residents a route to residency and citizenship, according to a recent report by Bank of America.

The implementation of the national security law in Hong Kong led U.K. authorities to give former citizens of British Hong Kong and their close ones an option for immigration via the British National Overseas (BNO) passport.

Hong Konger applications for the passport has been widely popular with a December report by «Bloomberg» estimating that five BNOs were being issued per minute based on data from the U.K. Passport Office.

Separately, a British Home Office study published last year estimated that 153,000 people could arrive in the U.K. from Hong Kong this year as the new immigration policy comes into effect.

Capital Outflow

And based on these forecasts, Bank of America (BofA) estimates that capital outflow from Hong Kong could reach HK$280.2 billion ($36.1 billion). The calculations assumed for capital outflow from the sale of average apartment price of HK$7.53 million ($971,224) and pensions withdrawal. 

BNO entry could reach as high as 322,400 Hong Kongers over the next five years, according to the British Home Office study, BofA projects total capital outflow to be up to HK$588 billion ($75.8 billion) as emigration slows down in the latter four years.

Robust Rates

Despite the sizeable outflow, BofA believes that Hong Kong’s short-term interest rates will not be hit due to still strong liquidity and low-interest rates worldwide.

«Capital outflows tied to emigration could help push USDHKD away from 7.75, the bottom end of the band,» said BofA strategist Chun Him Cheung in the research note. 

Other Outflows

Although the capital outflow from BNO exits alone is not expected to pose a major threat, the estimates do not account for other drivers of outflows.

Other potential drivers of outflow include changes to mainland tax rules impacting foreign income; relocation of hedge funds and family offices; or policy change in Canada targeting student and youth immigration.