Hong Kong will probably become the world’s largest cross-border financial centre in 2023, says this writer.
Singapore is slowly catching up with Hong Kong in the race to be Asia’s wealth hub. Make that very slowly.
It’s going to take the Southeast Asian nation at least 17 years to displace its rival, according to Bloomberg Intelligence analysis.
It’s been a bumper few years in Singapore when it comes to household finances, with family wealth rising 9.2% a year on average from 2019 to 2021. That far outpaces Hong Kong’s 2.3%, BI analyst Sharnie Wong calculated from Credit Suisse Group AG’s Global Wealth Report 2022 published last week.
The difference reflects the changing fortunes of the two hubs: Hong Kong’s population is shrinking following political turmoil and strict Covid-related curbs. Singapore is increasingly seen as a safe haven by affluent Chinese to park their assets and a go-to destination for Southeast Asia’s wealthy.
Still, Singapore’s pool of wealth was about half Hong Kong’s in 2021 and the average wealth per adult of US$358,204 ($514,671) was 35% less. That means it will take at least 17 years for the island to draw even, assuming Singapore can keep up its five-year compound annual growth rate of 9.6% and Hong Kong maintains its 5.2%, Wong said.
Hong Kong’s Cross-Border Wealth
Hong Kong will probably become the world’s largest cross-border financial centre in 2023, overtaking Switzerland, Wong forecasts based on data from the Boston Consulting Group. Assets booked in Hong Kong by non-residents amounted to US$2.3 trillion in 2021, compared with US$1.5 trillion in Singapore.
Singapore has an edge in attracting clients worried about China-US tension and Hong Kong’s national security law. But Hong Kong has Beijing’s support when it comes to wealth flows to and from the mainland via established financial infrastructure for the trading of assets such as stocks and bonds, as well as for wealth management.
The increasing affluence of China’s population and capital-market sophistication may help drive global wealth despite near-term economic headwinds, which together with tighter capital controls might lead to inflows to cross-border centres, Wong said.
“China’s growing mass-affluent segment could fuel wealth-management business, while its common-prosperity push might weigh more heavily on the ultra-high net-worth segment,” the analyst said.