Optimism is growing around a reacceleration of wealth flows into Hong Kong. finews.asia takes a look at the figures behind the city’s rebound.

Hong Kong’s private banking industry is experiencing renewed optimism after several difficult years that included political uncertainty, strict health-related restrictions and poor market performance. According to Financial Secretary Paul Chan in a blog post, many financial institutions have expanded operations in the city with more rented office space, relocation of global asset management heads and increased wealth positions. 

So, how has this translated in terms of the flow of high net worth individuals (HNWI) and their assets?

HNWI: Migration Flows

In 2023, the private banking and private wealth management business registered net fund inflows of nearly HK$390 billion ($50 billion), more than tripling the previous year’s figure. And there are signs that 2024 will see more inflows from HNWIs. 

Aside from local wealth generation, data suggests that foreigners will also contribute to inflows this year. According to a report by immigration consultancy Henley & Partners, Hong Kong will see the net entry of around 200 HNWIs after five consecutive years of outflows. 

Some of these are expected to enter the city via the Capital Investment Entrant Scheme (CIES), which requires a minimum investment of HK$30 million. Local authorities disclosed that more than 300 applications have been received with expectations of this resulting in over HK$10 billion of new investments.

Family Offices: Global Demand

Hong Kong has also publicly announced a target in 2023 of attracting at least 200 new family offices by 2025. Family Office Association HK chair Jessica Cutrera recently noted interest from the Middle East, India, Israel and other markets around Asia. During a promotional tour in Zurich and Geneva, Charles Ng, associate director-general of InvestHK, told finews.asia that he also observed growing interest from Swiss representatives.

In a response to a lawmaker’s questions, Secretary for Financial Services and the Treasury Christopher Hui said in April that 136 family offices are planning to set up or expand operations in Hong Kong. A dedicated team from InvestHK has also helped 64 family offices set up or expand. The top origin is mainland China (131) followed by Europe (30) and Asia (21). 

More Acceleration?

Could Hong Kong see further loosening? Lawmaker Robert Lee recently asked if the local government would consider increasing the flexibility of the CIES with regard to assets assessment. This includes accepting the HK$30 million in net worth to be held in the form of a company or not strictly requiring the applicant’s daily net balance to be $30 million but calculating based on the month-end balance instead. 

«We will continue to listen to the views of the industry and examine relevant arrangements as appropriate, thereby enabling asset owners to deploy and manage their wealth and fully realize the diversified investment opportunities in Hong Kong,» Hui responded.

According to the «UBS Global Wealth Report 2024», the number of HNWIs residing in Hong Kong is forecasted to increase 17 percent from 2023 to 2028 to around 740,000. By growth rate during this period, it is ranked 19 out of 56 markets.