Why should you invest in Asia through Hong Kong?
Hong Kong is increasingly attracting global family offices who want to grow their investments in Asia, particularly Mainland China. According to Campden Wealth’s Global Family Office Report 2021 (the Report) [1], setting up an office in the city provides easier access to investments in the region.
The East continues to grow at a fast pace
Family offices across the globe are looking to increase investments in Asia-Pacific with a particular focus on China, the Report shows. Nearly half of the respondents already have investments in China presently with a further 14% planning to enter the market.
The family offices in Asia-Pacific had seen their wealth grow faster than global peers in 2021, and they are looking to further increase investments in the region.
Asia-Pacific is also emerging as a prime destination for family offices from Europe and North America looking to open a second or third arm, the report indicates.
Being home to 60% of the global population, 36% of the world’s billionaires and representing half of the global GDP [2], Asia now sees entrepreneurs building world-leading businesses, and trade pacts facilitating both talent and cross-border commerce. The new Chinese capital, with Mainland China’s key initiatives, including Greater Bay Area and Belt and Road initiatives, helps to lift the regional economies. Asia's governments are also embracing digital technology in all fronts, such as healthcare, connectivity and currency. Those all increase the possibility for the world's economic gravity to shift to the East.
Asia itself is expected to see the fastest growth in the number of high-net-wealth individuals over the next five years, at 39% against the global average of 27%, according to a report by Knight Frank [3]. China, in particular, is a major contributor to this remarkable growth.
Family offices allocate more capital in alternative assets
While, capital is shifting towards Asia, family offices have shown a greater willingness to invest in alternative investments, new asset classes and sustainability, according to the Report.
The majority of family offices in Asia-Pacific surveyed for the Report plan to increase or maintain existing private equity investments in 2022.
Family offices in Asia-Pacific also allocated more to special purpose acquisition companies (SPACs) with one third planning to increase allocation to SPACs compared with the 12 per cent global average, as the Stock Exchange of Hong Kong (HKEX) introduced the SPAC listing regime in January 2022 after receiving substantial market support to its SPAC proposal consultation.
Investors seem to have also embraced the rise of digital assets. And sustainable investment is heating up rapidly with climate change as the number one target.
Hong Kong has the comprehensive financial infrastructure to be the launchpad for accessing Asia, particularly the Mainland China market
Strategically located at the heart of Asia, Hong Kong’s uniqueness in direct access to the mainland market while enjoying free capital flow makes asset growth and maintaining global capital allocation possible.
Hong Kong has long been the super connector between the mainland and overseas. Supported by the favourable policies orchestrated by the Chinese Central Government, such as CEPA (the Closer Economic Partnership Arrangement between the Mainland and Hong Kong), and the Greater Bay Area plan, Hong Kong further integrates into the mainland.
Hong Kong offers the best of both worlds. While Hong Kong companies are considered foreign companies when operating in the mainland market, Hong Kong companies enjoy preferential policies and national treatments as local companies in the mainland in certain industries, compared with other foreign companies. At the same time, Hong Kong companies continue to enjoy free capital flow, as well as simple and low tax rate, compared with mainland local companies.
Besides, Hong Kong’s world class and comprehensive financial infrastructure, business support and international lifestyle provide family office with ease in operation and settling in.
Staying on top of the world ranking, Hong Kong is still the biggest banking centre in Asia, the world’s biggest renminbi offshore settlement centre, and the second-largest cross border wealth management centre in the world, after Switzerland. Hong Kong had the most IPO listing globally seven times in the past 13 years[4]. Hong Kong’s vibrant and diversified financial markets allow us to tailor make value-solutions and products that meet the specific investment needs of wealth families.
Hong Kong’s straightforward and pragmatic immigration policy makes the family and senior management relocate to Hong Kong easy. It has a clear pathway to obtain PR and simple visa renewal mechanism. And FamilyOfficeHK team of InvestHK is also working to provide more targeted support to family offices when they apply for the residency after setting up operation in Hong Kong.
Hong Kong has all auxiliary infrastructure and abundant talents to complete the full circle of investments and provide family offices with ease in operation.
Lastly, the city and culture blend the West with the East. Global cuisine, several expats communities, and foreigners’ friendly atmosphere can be found in Hong Kong. It is also unique to have city life and a walk in the beach and a hike up a mountain within an hour car ride distance.
In 2021, the Hong Kong Special Administration Region (HKSAR) Government identified family offices as one of the priorities in the agenda, which has created a specialised team, FamilyOfficeHK, to support the setup of family offices in Hong Kong.
FamilyOfficeHK is a team of dedicated family office specialists based in Hong Kong, mainland China and Europe, to help families plan, set up and launch their offices in the HKSAR. At the same time, the team has been working hard to build bridges among family offices, their stakeholders, the regulators and Government with an aim to further optimise the FO ecosystem in Hong Kong.
For further information, contact Christine Ho or Dixon Wong at FamilyOfficeHK.
Sources:
[1] The Global Family Office Report 2021: Regional Series, Campden Wealth
[2] Age of Asia: Rise of a Multipolar World Special Economist Impact Report, PineBridge
[3] The Wealth Report 2021, Knight Frank
[4] Hong Kong as an International Financial Centre, Hong Kong Monetary Authority
