China’s high-net-worth individuals—that control an estimated $5.8 trillion, of which half is already offshore, according to consultants Capgemini—are increasingly choosing to place their money in Singapore rather than Hong Kong because the city-state is considered more removed from the influence of Beijing, Bloomberg reports.
According to Bloomberg, multiple sources in Singapore’s private banking industry have reported seeing increased flows at the expense of Hong Kong.
The shift is likely caused by the new transparency agreements signed by Hong Kong last year, which for the first time require all banks to report their account holders’ information to the region’s tax officials. This information is then shared with 75 jurisdictions, including the Chinese mainland. Singapore has similar agreements with more than 60 jurisdictions, but these do not include Hong Kong or Beijing.
“Many rich people from the mainland believe Hong Kong is still a part of China, after all,” Xia Chun, chief research officer at asset management company Noah Holdings Ltd, told Bloomberg. “They think there’s no difference in putting money in Hong Kong, compared to Beijing.”
According to a Capgemini survey, Hong Kong is still the most popular destination for Chinese offshore money, followed by Singapore and New York. But only 53% of high-net-worth individuals from the mainland now view Hong Kong as the top destination for investment, down from 71% two years ago, a survey by Bain & Co showed.
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