Singapore, Hong Kong Vies To Lure

Singapore, Hong Kong Vies To Lure The Super Affluent

HONG KONG – Two of the top financial hubs in Asia are competing to attract high-net-worth individuals (HNWIs) and boost their status as wealth management centres in the region, reported The Asset on Wednesday afternoon (8 September, SGT).

For instance, Singapore has launched the Variable Capital Companies (VCC) structure, while rival Hong Kong has implemented the Open-ended Fund Companies regime and the Limited Partnership Fund Ordinance.

Based on the latest edition of The Cerulli Edge by market researcher Cerulli Associates, most of the assets in both financial hubs come from offshore sources. Singapore is the favoured destination for super affluent Southeast Asians, whereas Hong Kong functions as the gateway to mainland Chinese wealth.

In Singapore, among the top attractions for wealthy people is its low taxes. While the authorities have recently hinted that it may review its tax rules, experts have warned that raising taxes could have a major impact on the city-state’s status as a wealth management hub.

Overall, there are around 200 single-family offices in Singapore that collectively oversee US$20 billion in assets. Among the super-wealthy people that have established family-office branches in Singapore are Google’s co-founder Sergey Brin, US billionaire Ray Dalio, and Shu Ping, who founded hot pot chain Haidilao.

Moreover, Cerulli pointed out that tax perks and low costs offered under Singapore’s VCC structure, which was implemented in January 2020, is also attractive to family offices, particularly with the presently available grant schemes. In fact, over 260 VCCs have been set up as of the end of April 2021.

To further entice single-family offices to establish VCCs, the Singapore’s central bank (MAS) intends to ease guidelines pertaining to qualified fund managers, given that most of VCCs don’t have the mandated asset management licences.

Meanwhile, Hong Kong is the top city in Asia in terms of ultra-HNWI density, with such persons for every 787 residents. Cerulli noted that the city has introduced several policies to enhance its wealth hub status, such as the Limited Partnership Fund Ordinance that was put in place in August 2020

This is a major development in enhancing Hong Kong’s competitive edge in the field of asset and wealth management, as the market researcher explained that limited partnership is a business format preferred by family offices. In fact, news outlets reported that Hong Kong now has roughly 50 licensed family offices and 260 limited partnership funds.

Despite fears of potential exodus or brain drain due to the strict quarantine rules, global asset managers interviewed by Cerulli are optimistic regarding their commercial operations in Hong Kong, given that the Chinese territory continues to be a gateway to leverage on Chinese wealth.

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