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Money returns to Hong Kong and Singapore

15 February 2018

Claire Coe Smith

The Asian wealth management centres of Hong Kong and Singapore report high net worth families refocusing their investments back into the region, after years of channelling assets into North America and the UK.

Whether put off by political messages emanating from British and American governments, or simply becoming more sophisticated in their own investment strategies, wealth advisers in both centres say their clients are returning home.

 

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Philip Marcovici is a retired lawyer in Hong Kong who now consults with governments, financial institutions and global families on tax and wealth management. He says: “There’s a real sense that the UK has sent a signal that it’s not interested in international investment. Certainly, people are unimpressed by the political situation in the UK and the chopping and changing in relation to legislation, so they are sending some of their investments back home to Asia.”

Much of that investment is going into real estate, both commercial and residential, he says, following a disruption of the historic model that saw families investing in Western economies when their children went to university there. Marcovici says: “There’s a lot more interest in Asian investments. Asia real estate is highly priced, but looking at the US and the UK together, both countries have slightly overplayed their attraction not only to investors but also for education. They have taken for granted that people want to go to their universities, and a lot of investment is linked initially to family members going to those universities. Now Asian universities are gaining ground, and there are alternatives like Canada which are becoming more popular.”

It is a view shared by Britta Pfister, head of wealth planning Asia Pacific at Rothschild Trust. She says the number of family offices setting up in the region continues to increase, and that these are more sophisticated than before.

There are reports of family offices hiring top talent from private banks. Pfister says: “When the young wealthy in Asia experience a liquidity event in the business, they will often set up a family office. The model is then to invest in real estate, and after that a lot is invested family-to-family. That money will go into private equity or early-stage venture capital, often in an industry that’s already known to the family, to support entrepreneurs or start-ups.”

She adds: “Particularly in China, there’s a certain pride and a belief in the concept of the ‘Asian Century’. There is a strong belief in supporting the local market, even country by country.”

Stuart Dowding is managing director with First Names Group, based in Hong Kong. He, too, has observed wealthy families in the region becoming more sophisticated in their relationships with their advisers: “Wealth in Asia has historically been held by banks, and so individuals naturally went to their bankers to assist them with their trust needs,” he says. “More recently, however, we are seeing wealthy, Western-educated children coming through the family businesses who are more aware of the advantages of working with specialist trust providers.”

Hong Kong is well-established as the go-to wealth management centre for Chinese families, while Singapore typically services the rest of the Southeast Asia region.

Dowding says: “We are talking more to clients about alternative assets – planes, yachts and classic cars.”

Irene Lee is business development manager with Hawksford, based in Singapore. She says not all Chinese families are focused on Hong Kong: “Where Chinese clients are concerned, they do like having their structures in Hong Kong, but some are moving out of there because ultimately Hong Kong is part of China and they want a degree of separation to meet their asset protection requirements.” She adds that Singapore is making great efforts to build its wealth management reputation.

Marcovici believes Singapore is stealing a march: “When it comes to wealth management, Singapore has won out against Hong Kong by far. The Singaporean government has been far more strategic in terms of its focus on education in wealth management, and has paid much more attention to what the industry needs to thrive.”

With Asia’s high net worth individuals refocusing their attentions on the region, both centres can expect growing demand for some time to come.

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