Hong Kong’s Rich Are Preparing for a Worst-Case Scenario
15 Jun 2020

One Hong Kong businessman moved $10 million to Singapore and plans to transfer more. Another is eyeing London property, worried that prices in Hong Kong are too high. Well-to-do families across the city are opening offshore bank accounts and applying for alternative passports.

While it doesn’t add up to an exodus just yet, Hong Kong’s rich are increasingly hedging their bets as the financial hub suffers its worst economic and political crises since at least 1997.

Many high-net-worth investors are either reducing their Hong Kong exposure or taking steps to ensure they can withdraw assets at a moment’s notice, underscoring the challenge for Chief Executive Carrie Lam as she tries to maintain the city’s status as magnet for Asian wealth. Rich individuals are major players in Hong Kong’s equity and real-estate markets as well as big buyers of Chinese corporate bonds issued in the city.

Private bankers say their clients accelerated contingency planning efforts after China announced last month it would impose controversial national security laws on Hong Kong. The legislation threatens to erode the former British colony’s judicial independence, provoke sanctions from the U.S. and revive street protests that battered the tourism and retail industries even before the coronavirus outbreak plunged the economy into its deepest recession on record.

“What we’re basically seeing is a bit like a slow-moving train wreck,” said Richard Harris, chief executive of Port Shelter Investment Management in Hong Kong. “People who haven’t moved their money out may be tempted to think: ‘Well, maybe I should be moving my money out.’ That process is likely to continue.”

To be sure, there’s little evidence so far of widespread capital flight.

Hong Kong bank deposits increased to a record in April and the city’s currency has continued to trade at the strong end of its permitted band against the dollar. Hong Kong’s wealthiest billionaires have publicly endorsed the proposed security laws and expressed confidence in the city’s future.

In private, however, many Hong Kong entrepreneurs and high-earning professionals are sounding a more pessimistic note.

By Alfred Liu, Lulu Yilun Chen and Vinicy Chan, Bloomberg, 13 June 2020

Read more at Bloomberg

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