According to a report by Voice of America (VOA) quoting Reuters on Thursday (May 28), bankers and other sources in the wealth management industry stated that the number of wealthy mainland Chinese who choose to deposit assets in Hong Kong is expected to decrease. This is due to the concerns that Hong Kong may allow mainland Chinese authorities to track down and confiscate their assets.
Some bankers say that more than half of Hong Kong’s estimated USD$1 trillion worth of wealth is deposited by individuals from mainland China. Hong Kong’s proximity to mainland China, its transparent judicial system and the pegging of Hong Kong dollar to US dollar which ensures its stability in value all led to the wealthy people in mainland China choosing Hong Kong to deposit their assets in.
But now, people are worried that due to capital and brain drain, Hong Kong is losing its advantage as a global financial center.
According to Reuters’ interviews with bankers and corporate headhunters, some wealthy Chinese customers are seeking other places to store their wealth. Among them, countries such as Switzerland and London are their top choices.
A Chinese billionaire had planned to invest in Hong Kong, but recently changed his mind. According to the billionaire’s consultant who works for a wealth management banking institution in Europe, his bank had already begun to receive inquiries from wealthy Chinese individuals to open accounts outside Hong Kong.
A report published by Credit Suisse shows that globally, as of mid-2019, Hong Kong’s per adult wealth is second only to Switzerland, and the number of individuals with assets of more than USD$50 million ranks among the top ten in the world.
Last year, the Hong Kong authorities tried to amend the extradition law, so that the authorities could send those arrested in Hong Kong to mainland China, where there is little judicial independence.
Facing strong backlash, the Hong Kong authorities were forced to withdraw their motion to amend the extradition law. Despite being withdrawn, the motion still triggered panic among wealthy individuals in Hong Kong that Beijing would freeze their assets, prompting some to transfer their assets overseas.