When more than 80 of China’ s wealth managers gathered lately at the Shangri-La hotel on Singapore’ s resort island of Sentosa, the chatter during tea smashes kept returning to one theme: Hk is starting to be eclipsed by Singapore as the favorite destination for the prosperity of China’ s rich.
On the line for banks in both cities will be a major pile of money. China’ s high-net-worth individuals control an estimated $5. 6 trillion— almost half of it currently offshore, according to consulting firm Capgemini SE . For some, the city-state of Singapore is preferable because it’ h at a safer distance from any kind of potential scrutiny from authorities within Beijing, according to interviews with various wealth managers. Multiple private financial sources in Singapore, who would not really comment on the record because of the awareness of the subject, report seeing improved flows at the expense of Hk.
The rich may be feeling uncovered by changing banking practices. Hk has signed tax transparency contracts that for the first time last year required all of banks to report their accounts holders’ information to Hong Kong taxes officials, in preparation for offering that information to 75 jurisdictions, including mainland China. Singapore may have similar agreements with 61 jurisdictions. But they don’ t include possibly Hong Kong or Beijing, meaning the accounts and account holders aren’ big t visible to the Chinese government. “ Many rich people from the landmass believe Hong Kong is still a part of The far east, after all, ” says Xia Chun, chief research officer at Noah Holdings Limited. of Hong Kong, a property management service provider. “ They believe there’ s no difference within putting money in Hong Kong, compared to Beijing. ”
At the same time, a lot more Chinese banks in Hong Kong are usually “ trying to synchronize their inner systems with those on the landmass to improve service efficiency, ” states Eva Law, the Hong Kong-based founder of the Association of Personal Bankers in Greater China Area. “ This also means the clients’ information will become more transparent as well as the mainland can identify fund runs more easily, or will have fuller plus faster access to your asset holdings, thus enabling easier investigation plus tracing. ”
Overall, Hong Kong continues to be the primary destination for China’ s just offshore money, according to a Capgemini study, followed by Singapore and New York. The number of Chinese high-net-worth individuals who watch Hong Kong as their preferred overseas host to investment is down to 53 %, from 71 percent two years back, according to a survey in This summer by Bain & Co. Greater than 20 percent favor Singapore, upward from 15 percent two years back. “ Singapore is the Zurich from the East, ” says Xiao Xiao, the Beijing-based chief operating official of Chinese wealth manager Prospects Capital.
“ We all see Singapore, not Hong Kong, because the bridgehead of China’ s purchase overseas, ” says Li Qinghao, co-founder of NewBanker Tech Consulting , which usually organized the Sentosa conference this past year. About 78 percent of S$2. 7 trillion ($1. 9 trillion) in assets under management within Singapore comes from overseas sources. Morgan Stanley , JPMorgan Pursue & Co. , and other companies with big private banking functions are building up their teams associated with China relationship managers in Singapore.
China has been tensing its grip on Hong Kong. Last year, Chinese financier Xiao Jianhua has been reported by local media to get been seized from a Hong Kong resort by Chinese authorities and delivered to the mainland. The incident adopted the disappearance of several Hk booksellers who sold books essential of China’ s Communist Celebration and were reported to have already been taken involuntarily across the border.
Then there are the improved restrictions on Hong Kong’ t financial practices, such as a 2016 attack on sales of certain sorts of insurance products to mainland Chinese language. The products pay dividends over a number of years and are also essentially viewed as investments— and possibly a way to send money out of China and taiwan and evade capital controls. “ The Hong Kong market is now seriously affected by mainland China, ” states Guan Huanyu, president of Beijing-based wealth manager Zhenghe Holdings, who have attended the Sentosa event.
While Hong Kong’ s Securities & Futures Commission doesn’ t break down the foundation of funds, its data display that growth in the city’ s i9000 private banking business has been decreasing. Hong Kong logged 10. 7 % growth in private banking property under management in 2016, straight down from 18 percent in 2015.
Singapore has extra attractions for the wealthy of Cina. Mandarin is one of its four established languages, and it has world-class health services and international schools. Not definately not the Shangri-La Hotel, Sentosa’ h casinos are a popular draw meant for Chinese tourists. Mainland Chinese had been the largest foreign buyers of luxurious properties in Singapore during the 1st half of last year, according to consultancy Cushman & Wakefield . Real estate is far less expensive than in Hong Kong.
Yet mainly, the rich like to diversify— not only among asset classes, yet among political regimes. “ The majority of our clients have undergone the shift from poor to wealthy, ” says Kou Quan, vice president at Tianjin-based Xinmao S& T Expense Group . “ And they’ re all worried about becoming bad again. ”