High net worth individuals (HNWs) are increasingly global.
Business interests abroad, to investments, future planning, family, tax planning, and international property investment, are all commonalities amongst HNWs. Home country tax and legal complexity unsuited to the individual’s situation is another common denominator. As a result, a HNW’s financial horizon clearly extends well beyond ‘home’ country borders.
So where do they manage their financial affairs?
For many wealthy investors, Asia is often front-of-mind as a hot bed of investment opportunity and ‘offshore’ banking. The two main Asian banking centres (or to use industry jargon – ‘booking centres’) for HNWs are Singapore and Hong Kong.
According to a 2015 report from Deloitte, Hong Kong is the 5th largest wealth management booking centre in the world with US$650billion and Singapore 6th largest in the world with US$500billion.
Why are Asia private banks in Singapore and Hong Kong so successful?
The same institutions typically operate in both jurisdictions, with the exception of the local and expat-oriented financial adviser businesses which tend to be local names. The tax and regulatory regimes are also very similar. Dividends have similar treatment, typically treated tax-free, as does stamp duty on trading securities, typically 0.1%. Both have a strong rule of law and are reliable political jurisdictions. Their banking systems are liquid and global.
If you are reading this wanting total financial secrecy then those days are nearly over. Singapore is increasingly following Switzerland’s lead by opening its books to your domestic tax jurisdiction, and Hong Kong is close behind. But several subtle, yet critical differences exist which affect any investor considering to move their wealth East.
In overly simplistic terms, from an investment perspective, Hong Kong is the gateway to ‘Greater China’ and North Asia, Singapore is the gateway to South East Asia and Indo-Asia.
Hong Kong has greater business ties to China and has a much higher concentration of Chinese private clients than Singapore.
Singapore has a wider geographical depth of experience, expertise and language than Hong Kong. This is an important consideration for South East Asian and European clients who typically have a wider range of expertise in their domestic financial issues to choose from than is available in Hong Kong.
Wealthy investors will consider other booking centres such as Dubai, Switzerland, and even smaller centres like Malta, UK Channel Islands, Gibraltar, and Caribbean, but if you are an investor or entrepreneur with interest in Asia, and many HNWs are, then being close to a major commercial centre like a Singapore or Hong Kong is a wiser, if not common sense decision to make.
Smart investors view the world as a small place.
Transparency, depth of available expertise, and liquid banking systems are all game changers for HNWs in deciding how they manage their money and which wealth management centre (WMC) they select. It’s exactly that mentality of seeking the best outcomes for their wealth that has made HNWs successful in the first place.
If you’d like to find out more please contact our UK team HERE and they will provide contacts for our Asian office.
