Family office advisers see rising interest from clients wanting to move assets from HK

Sham Shui Po District, Hong Kong. Photo by Joseph Chan on Unsplash

Service providers to some of Asia’s wealthiest families say they are fielding a rising number of calls about shifting away from Hong Kong, with some already moving money to Singapore-based banks.

“Projects that were going into Hong Kong, people are now holding back,” said Shanker Iyer, Asia executive chairman at IQ-EQ, which says it has about $450 billion of assets under administration for family offices and other investors.

The company is getting regular calls from clients asking about the logistics of leaving Hong Kong, he said. “People who aren’t in the market already and want to come in, they’re having second thoughts,” with Singapore seen as a much more business-friendly destination, he added.

The shift comes at a critical time for Hong Kong, which has been roiled by months of violent protests that have made investors fearful of direct intervention by Chinese authorities to quell the unrest.

‘Little typhoon’

Clifford Ng, a managing partner at Zhong Lun Law Firm in Hong Kong, who specializes in advising high net-worth individuals on cross-border transactions and investments and has lived in the city since 1995, said the level of interest in moving assets to Singapore is “unprecedented.”

“We have certainly received a lot of questions regarding the freedom to move money,” he said. “Investors hate uncertainty and Hong Kong is a little typhoon within a much bigger storm of uncertainty. Risk avoidance, in handling other people’s money, drives that money to a less uncertain place.”

With financial services accounting for about one-fifth of Hong Kong’s GDP, any disruption will have a real impact on the economy, which is already slipping as tourists desert the city and retail sales slump.

The possibility of Hong Kong’s legal system changing earlier than the scheduled deadline of 2047 is another cause of angst among family offices, according to IQ-EQ Group Executive Chairman Serge Krancenblum.

The city operates a legal system derived from British common law under the One Country, Two Systems principle. A failed attempt to introduce extradition laws that would expose citizens to prosecution in mainland China sparked the protests and the imposition of colonial-era emergency powers have also shaken investor confidence.

“If you’re an investor, even a non-local one with Hong Kong structures as a family office, how can you base your future on a system that may not be there as long as you thought it would be?” Krancenblum said. “This is a very big problem. Investors, and families, care about stability.”

The instability may already be having an impact, with Goldman Sachs Group Inc. estimating that there has been an outflow of Hong Kong dollar deposits of between $3 billion to $4 billion to Singapore.

Hedge funds

“We’ve seen some of our Hong Kong-based managed clients that have said they want to move their assets from Hong Kong-based banks to Singapore-based banks,” said Steve Knabl, chief operating officer of Swiss-Asia Financial Services Pte, whose platform hosts hedge funds and wealth managers. “So the move is clearly there, especially from private clients.”

While many hedge funds are seeking advice from lawyers, accountants and migration agents, few are actually moving, and Knabl said he didn’t expect an overnight shift in staff from Hong Kong to Singapore.

Eurekahedge Pte data show assets under management by Hong Kong hedge funds reached a record high $92.1 billion in September.

This is partly because the months-long process needed to get a license in Singapore can be a deterrent to moving. Hong Kong also remains a better gateway for hedge funds seeking to profit from mainland China without the downsides of living there.

Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.