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https://scmp.com/business/money/article/3102726/hong-kong-has-more-us-dollar-millionaires-year-calmer-streets-boost
Business/ Money

Hong Kong has more US dollar millionaires this year, as calmer streets boost confidence and perception of wealth

  • As of May 2020, there were around 504,000 people in Hong Kong worth HK$10 million (US$1.29 million) or more in total assets, according to a Citibank report
  • ‘Investors estimated their wealth with respect to the general market sentiment and short-term social events,’ says Citibank Hong Kong’s retail bank head Josephine Lee Kwai Chong
Central Hong Kong, as seen from the city’s West Kowloon Waterfront Promenade. Hong Kong had more US dollar millionaires in 2018. Photo: Sam Tsang

Hong Kong’s ranks of US dollar-denominated millionaires grew this year, as a booming stock market and bursting schedule of initial public offerings boosted wealth, while the cessation of street protests provided some solace to businesses struggling with the city’s worst recession in history.

As many as 504,000 people in Hong Kong are estimated to have HK$10 million (US$1.3 million) each in total assets this year, an increase of 91,000, or 22 per cent, from 2019, according to Citibank’s Hong Kong Affluent Study 2019/2020. One in five of these wealthy people owned at least HK$10 million in liquid assets – stocks, bonds or currency holdings, excluding property – with the median wealth at HK$17 million, according to the poll of 3,500 people aged 21 to 79.

Citibank’s survey, conducted over the course of two polls in late 2019 and early 2020, shows how Hongkongers are hanging on to survive the city’s worst recession in decades following a combination of the US-China trade war, more than a year of street protests and the economic havoc wreaked by the coronavirus pandemic. As local authorities gradually relax social distancing rules and economic life makes a slow recovery, improving sentiment is prompting consumers and investors to commit to big-ticket purchases, such as real estate.

“Investors estimated their wealth with respect to the general market sentiment and short-term social events,” Citibank Hong Kong’s retail bank head, Josephine Lee Kwai Chong, said during a press conference. “Governments around the globe are adopting measures to help the market [amid the coronavirus pandemic], so investors’ sentiment is more positive [compared with 2019].”

Hong Kong had more dollar millionaires in 2018, with 511,000 people estimated to have at least HK$10 million in assets.

“Though the Hong Kong stock market’s performance was not bad at the end of 2019, investors’ outlook for the market was more pessimistic due to the general social environment,” Lee said, referring to the one-fifth shrinkage in the number of multimillionaires by the end of 2019, at the height of the anti-government protests.

Property continued to be the main component of Hong Kong multimillionaires’ assets, accounting for 78 per cent of their total holdings, an increase of 5 percentage points from 2018, Citibank said in the 17th edition of its survey.

The average value of a new home dropped by a quarter in 2019, caused by the anti-government protests that became increasingly volatile in the second half of the year, according to real estate agency Ricacorp Properties.

Nearly 80 per cent of the multimillionaires surveyed in 2020 anticipated that property prices would drop over the next 12 months. Compared with the end of 2019, however, more people in 2020 considered the period a “good time to buy”.

“Some of our respondents said they wanted to take advantage of the price drop,” said Lee.

Almost 70 per cent of the surveyed were not interested in buying a new property, as many veteran property investors are also anticipating a deeper correction in prices while cashing out of their holdings.

In terms of liquid assets, most investors hold stocks and foreign currencies, including the renminbi. Cash and deposits account for half of their liquid assets distribution, while stocks account for 28 per cent.