Hong Kong ‘still top choice for China’s rich’ investing outside the mainland and overseas

Investors drawn to city's low tax rate, shared culture and financial access to the rest of the world, survey of high net-worth players finds

PUBLISHED : Tuesday, 26 May, 2015, 3:54pm
UPDATED : Wednesday, 27 May, 2015, 8:22am

Hong Kong remains the top offshore investment option for the mainland's moneyed elite thanks to its proximity, low tax rate, cultural similarities and global access, according to a survey released yesterday.

Consulting firm Bain & Co said the survey, conducted jointly with China Merchants Bank, polled roughly 2,800 mainlanders who had more than 10 million yuan (HK$12.5 million) in investable assets and had overseas investments.

Of those about 71 per cent said Hong Kong was their preferred offshore investment destination. The United States was seen as a good option for 54 per cent of the respondents, while Australia was well regarded by 17 per cent.

The study, which is conducted every two years, found that interest in overseas investment was growing among the high net-worth individuals.

About 37 per cent of the respondents in this year's study said they had financial products and property outside the mainland, compared to 33 per cent in 2013 and 19 per cent in 2011.

This percentage is even higher among the super-rich, with 57 per cent of people with more than 100 million yuan of investable assets having money offshore.

"Hong Kong has always been a top choice for Chinese high net-worth individuals," said Wang Jing, general manager of the private banking department at China Merchants Bank.

"The city provides a variety of choice for people to invest globally. In addition, there is no time difference [with the mainland] and the language and cultural environment are familiar to mainland customers.

"The legal system and low tax rate are also reasons that attract them."

Wang said she believed Hong Kong's appeal for mainland investors would continue, although the city had tightened its immigration policy and seen slower growth in mainland visitors in recent years.

"Compared to places like the United States and Australia where mainland investors tend to buy property, Hong Kong is a popular choice for [mainlanders] to invest in stocks and other financial products. This has not changed," she said.

According to the study, the mainland had more than one million high net-worth individuals by the end of last year, double the total for 2010.

The total private wealth market grew 16 per cent annually between 2012 and 2014 and reached 112 trillion yuan last year.

In the last two years, wealthy mainland investors have bulked up their holdings in stocks and other financial products such as venture capital and private equity.

Meanwhile, fixed-return products like bonds and bank asset-management products have taken a smaller share of their investments.

Nearly two-thirds of respondents in the study said "wealth preservation" and "wealth inheritance" were their two top concerns.

And 65 per cent said they also wanted to leave their children a spiritual legacy, such as an understanding of the importance of working hard and the value of a good education.

The researchers found that a group of "newly rich" is emerging on the mainland. This group of people mostly work in IT, biotechnology, and environmental and high-end manufacturing.

Eighty per cent of them were aged under 50 and had a more open and aggressive investment style, it said.