HK family offices assert city's regional hub status despite geopolitics
While some wealthy individuals have opted to relocate assets abroad, citing geopolitical considerations, Hong Kong family office leaders downplay these concerns.
From an asset management standpoint, executives viewed Hong Kong's immense capital markets and official incentives as pivotal. While maintaining private banking connections elsewhere, one could still oversee investments from the city, they noted.
“The diverse talent pool, deep financial market, geographic proximity, the mature services industry here, and the government's supportive policies will all be quite positive for more family offices to develop in Hong Kong,” said Helen Zhu, managing director and chief investment officer of NF Trinity, the family office of Nan Fung Group.
Zhu believed the demand coming from wealthy individuals in mainland China to have their assets managed by professionals is still in the early stages, and this demand will grow immensely.
“I'm sure this is going to be a space with huge growth potential over the coming five to 10 years as the Asian family office demand continues to mature, and as the capital in Hong Kong continues to mature,” Zhu told AsianInvestor.
“People definitely should not write off Hong Kong and just think about other jurisdictions,” Zhu said.
“If some individuals or family offices prefer, they can set up their bank accounts elsewhere, but still have their family office infrastructure and teams based in Hong Kong, so they can benefit from all the other great things that Hong Kong has to offer in this space,” she said.
The Hong Kong government has been on a marketing campaign to attract new family offices to the city, offering incentives like profits tax exemption.
“The hurdle to opening a family office and benefiting from those preferential policies in Singapore will be much higher, versus the threshold of that in Hong Kong,” she noted.
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Recently, a new multifamily business, the Landmark Family Office, established its headquarters in Hong Kong, aiming to onboard clients from across the world.
The family office evaluated several locations, including Hong Kong, Singapore, and the Middle East, ultimately selecting Hong Kong as “the number one strategic location”.
They cited the size of its capital market — nearly seven times larger than Singapore’s by stock market capitalisation — enabling larger deals, more transaction volume, and IPOs.
Additionally, most large private equity firms maintain offices in the city, noted Cameron Harvey, chief executive officer of Landmark Family Office.
Hong Kong's stock market capitalisation was HK$32 trillion ($4.1 trillion) as of September 29, 2023.
“We just feel this is truly an international financial centre as well as the fact that it's a gateway to mainland China, so obviously being perfectly positioned for that massive growing wealth,” Harvey told AsianInvestor.
GOING GLOBAL
“It's important to realise that whilst our investment team is based here and decisions are done here, the clients’ assets don't need to be held here,” Harvey noted, adding that assets can be held anywhere from Singapore, Australia, to Switzerland, depending on clients’ needs and situation, while a company trust structure can also be set up.
“There are certainly ways to hedge your geopolitical risk regardless of where your headquarters is,” he said.
For European and Australian clients, managing some assets in Hong Kong provides global diversification. Situated between the US and Europe, Hong Kong also enables flexible trading across time zones, benefitting Australian investors in particular, he noted.
Typically, about 22% of an Australian client’s assets will be held offshore, he said.
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Similarly, Sun Hung Kai & Co, despite being a family office headquartered in Hong Kong, also set up counterparty relationships in Singapore, with banking and custodian services in the city-state as well.
Sun Hung Kai & Co launched its multifamily services last year to offer investment opportunities to people outside the family.
According to Allen Sing, managing director of Sun Hung Kai Capital Partners, who leads the multifamily services, some clients have preferred utilising their banking relationships in Singapore to hold assets elsewhere for various personal reasons while having their investments managed by the team in Hong Kong.
AsianInvestor will be hosting its Family Office Briefing in Hong Kong on November 28. For more details, click here.