Incentives Are Prompting Wealthy Families From Middle East, Europe to Eye Hong Kong for Managing Their Wealth, Industry Players Say
A growing number of wealthy families from the Middle East, Europe and Asia are considering using Hong Kong to invest their riches after the government and wealth managers have increased their promotional efforts this year, according to industry players.
“Traditionally, Middle East investors tend to use London to invest their international portfolio,” said Eleanor Wan, the outgoing CEO of BEA Union Investment Management.
“However, after the many roadshows by Hong Kong government officials and the regulators, we have seen some Middle East family offices have started to explore the investment opportunities in Hong Kong.”
Hong Kong Chief Executive John Lee Ka-chiu, Financial Secretary Paul Chan Mo-po and Hong Kong Monetary Authority (HKMA) boss Eddie Yue Wai-man have led separate delegations to various Middle East countries this year to attract investments and forge closer ties.
Wan will soon go to the region to explore opportunities. After heading the BEA Union for 12 years, she will step down and pass the reins to Janet Li on receiving regulatory approval for the transition.
The company, a joint venture between Bank of East Asia and Union Asset Management, Germany’s second-largest asset management company, invests for many Hong Kong and overseas family offices. It managed about US$7.3 billion of assets as of the end of last year.
Wan said European family offices have used the city to invest in other Asian countries because of its active capital market, low tax rate and clear legal status.
“European family offices take ESG [environmental, social and governance] very seriously,” she said. “As Hong Kong is a green bond and green finance fundraising centre, it helps attract many of the European family offices to invest here.
“The internationalisation of the yuan also helps Hong Kong to attract family offices to invest here. Hong Kong has the largest pool of offshore yuan, and we have the connect schemes for international investors to invest in mainland shares and bonds, which are not available in other markets.”
Wan said the challenges are the volatile market and geopolitical tension between the US and China, which have led some investors to pull back from putting their money in Chinese assets.
“However, we also found some investors consider it is time to invest in the region as they consider the valuation of the Hong Kong market to be cheap,” she added.
Saudi Arabian companies such as the oil giant Saudi Aramco can apply for secondary listings in the city after Hong Kong Exchanges and Clearing (HKEX) added the Saudi Exchange, known as Tadawul, to its list of recognised bourses.
The addition allows companies with a primary listing on the Saudi Exchange’s main board to apply for a secondary listing in the city, HKEX said on Thursday.
“The listing of Saudi Arabian companies in Hong Kong will attract more wealthy individuals and families from the Middle East to invest here. This will strengthen Hong Kong as a wealth management hub,” said Robert Lee Wai-wang, the lawmaker for the financial services sector and CEO of local brokerage Grand Capital Holdings.
The Hong Kong government in March unveiled measures to entice billionaires to set up family offices – corporations established to pursue investment, philanthropy and succession planning – in the city.
A revamped investment migration programme, tax breaks and art storage facilities are among measures that have been introduced with the aim of achieving Chief Executive John
Lee Ka-chiu’s target of attracting 200 new family offices to the city by 2025.
Paul Knox, managing director and senior wealth adviser at JPMorgan Private Bank Asia, said these measures have already prompted many wealthy families to consider Hong Kong.
“There has been a lot of interest from mainland China because there is ease of access and they understand Hong Kong. However, we have also seen interest from other parts of the world, from Southeast Asia, the Middle East, Australia, New Zealand, Europe, the UK as well as the US,” Knox said during a panel discussion at the Post’s “Redefining Hong Kong Series” – family office edition, on Wednesday last week.
