Rich Chinese Return to Hong Kong as Singapore Steps Up Scrutiny

(Bloomberg) — Hong Kong is winning back wealthy Chinese by rolling out the red carpet for the rich while rival Singapore scrutinizes foreign money.

The Chinese territory is expected to welcome about 200 high-net worth individuals this year after five years of millionaires skipping town, according to data provided by intelligence firm New World Wealth and immigration consultancy Henley & Partners, thanks to initiatives including family office tax concessions and visa and residency programs. 

At the same time, fallout from a blockbuster S$3 billion ($2.2 billion) money laundering case has put the city’s family offices and wealthy immigrants under the microscope.

It’s a shift from the pandemic years when Hong Kong’s strict quarantine and political upheaval led to mainland Chinese flocking to Singapore. Now, private bankers, service providers and insurers are saying Hong Kong business is picking up, while Singapore’s stepped-up money laundering rules are putting some customers off.

Hong Kong’s assets under management grew 2.1% to HK$31 trillion ($4 trillion) in 2023. Driven by a strong performance of private banking and wealth management, net fund inflows jumped more than 3 times to nearly HK$390 billion last year, Financial Secretary Paul Chan wrote in his blog this month. In 2022, private banking and wealth fund inflows slumped about 80%.

Private bankers and service providers who spoke to Bloomberg News requested not to be named because the information discussed was private. 

Under a Microscope

In Singapore, the fallout from the money-laundering case means some banks are re-doing their know-your-customer process, and rich Chinese in Singapore are under a microscope, according to two private bankers. Their clients are frustrated with the process and the questions being asked, they said. 

The Monetary Authority of Singapore in April introduced a digital platform to share customer information to combat money laundering. Since then, a service provider in Hong Kong said it received more than 15 inquiries from wealthy Chinese seeking to move or set up family offices in the city. Half those inquiries already resulted in actual business, they said.

“For many of the mainland billionaires, because they don’t like the arbitrary government interventions or government checks or threats to their personal wealth, that’s why they wanted to move money out of China,” said Zhiwu Chen, professor of finance at the University of Hong Kong. “If Singapore would do as many checks and tighter regulations as the mainland, then why would they want to go there?”

Chen said he knows billionaires who have “warmed up” to basing more of their family office business in Hong Kong as their enthusiasm for Singapore has waned. 

In Hong Kong, business at the China desks of private banks has picked up while the pace of growth at the same groups in Singapore has slowed, meaning less money is moving to Singapore, according to two senior private bankers.  

Pull, Capital

Hong Kong has benefited from the reopening of its borders in 2023. The city has efficient connections to Shenzhen and the surrounding Greater Bay Area via its high speed rail line. That’s attractive for wealthy Chinese who want to be able to closely monitor onshore businesses.

“Despite the political changes in Hong Kong and a number of challenges associated with that, there remain meaningful reasons for wealth and business owners to develop and maintain connections to Hong Kong,” said Philip Marcovici, who consults with global families and financial institutions on wealth and taxation.

The city’s introduction of the top talent visa program targeting high income earners and university graduates is paying off, with more than 68,000 applications approved since its introduction in 2022. 95% of those are from mainland China, according to government data. 

One of the recipients is Wang, a tech worker from Chongqing in southwest China. Having a Hong Kong identity card allows him to travel more easily to the US and other places for work, he said. 

Many of his friends were worried about the future direction of Chinese government policy during Covid and sought residence elsewhere, looking for more neutral ground amid rising geopolitical tensions. While there’s a narrative that Hong Kong is becoming more like China, he says it remains more open, particularly for capital flows. 

“Hong Kong is still a good place for business people,” he said, particularly “if you want to travel a lot or move your money freely.”

Pick Up

According to the two senior private bankers, revenue in Hong Kong already grew by double digits this year, driven by Chinese clients. Most clients have assets of $5 million to $10 million and are not in the ultra-rich category, another private banker said. 

It’s still difficult for Chinese nationals to move money offshore and billionaire wealth creation is hampered by a sluggish market for initial public offerings in Hong Kong.

But Chinese money that was going to Singapore is now headed to Hong Kong, another senior banker said. That’s supported by data including sales of insurance products popular with wealthy Chinese from the mainland, which jumped 63% to HK$15.6 billion in the first quarter compared to same period in 2023. 

In June 2021 the government set up the Family Office Hong Kong team to encourage the growth of the city’s wealth management industry. Since then, about 64 family offices have been established or expanded their business, with 49 coming from the mainland, according to government data. 

Money Laundering

Still, revelations from Singapore’s money laundering scandal are also triggering concerns in Hong Kong that some of the new arrivals have something to hide. 

A plan that offers residency to people who invest HK$30 million in Hong Kong has attracted over 250 applications since its March launch through May month-end. According to official data, nearly 200 are from from Guinea-Bissau and Vanuatu, countries where cash for residency programs have been used by financial criminals. 

Chinese nationals holding passports from Vanuatu, Saint Kitts and Nevis and Turkey were among those convicted in Singapore’s money laundering scandal. “It creates doubts about money laundering,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis SA. 

Hong Kong’s financial secretary Chan wrote in his blog in July that more than 340 applications have been received for the residency plan since launch and if approved, they are likely to bring more than HK$10 billion to Hong Kong. 


To be sure, Singapore remains a popular destination for migrating millionaires. Its forecast to welcome a net 3,500 millionaires this year, the third most globally, according to Henley & Partners. 

But Hong Kong’s population of millionaires is finally forecast to rebound after losing about 500 to migration in 2023, according to Andrew Amoils, head of research at New World Wealth, Henley’s research partner.

“Despite a tough past decade, Hong Kong is still one of the world’s top millionaire hubs,” said Amoils. There is “definitely a turnaround there,” he said.  

–With assistance from Chanyaporn Chanjaroen and Trista Xinyi Luo.

©2024 Bloomberg L.P.


Leave a Comment