BEA: China’s HNWI client base increasing in Hong Kong

Added 19th February 2016

Personal wealth is flowing out of China as domestic investors grow increasingly concerned over the markets and economic growth, according to Bank of East Asia.

BEA: China’s HNWI client base increasing in Hong Kong

Market turmoil and worry over management of the economy have resulted in more mainland clients for the Bank of East Asia's wealth management business in Hong Kong, referred by its mainland network, bank officials said.

Assets from mainland clients as a percent of the bank’s overall private banking assets were 36.8% at the end of 2015 compared to 28.4% in 2014, according to a bank statement.

Over the same time period, the related share of income from mainland clients increased to 41.5% from 37.6%.

“High-net-worth individuals in China are looking to Hong Kong as a reliable centre to manage their wealth, and have responded well to BEA’s holistic wealth management platform,” said David Li, chariman and CEO, in a statement to investors.

Adrian Li, son of the chairman, said the contribution of wealth management business from mainland customers could rise to 50% in 2016, according to a report in the SCMP. The biggest segment of new clients are professionals in their 30s.

In 2015, before-tax profit of BEA’s wealth management business rose to HK$588m ($75.5m) from HK$430m in 2014, as the bank's China business as a whole reported a profit drop of about 20%. 

$30bn in RE outflows

Further outbound capital flows were evident in the real estate sector. Chinese outbound real estate investment doubled to about $30bn in 2015, with money going to New York, London, Sydney and Melbourne property, according to a report from Knight Frank Hong Kong.

“The recent RMB devaluation and stock market turbulence have contributed to the market uncertainty and increased investors’ wariness of further policy intervention,” the firm said.

“This underscores the need for diversification for Chinese investors, particularly to overseas markets."

Knight Frank said this “fourth wave” of investors was a mixed group “consisting of lesser known small- to mid-cap companies and developers, private equity funds and individuals, who were increasingly active in overseas markets.

”Chinese outbound investment is expected to be strong in 2016, supported by a growing need of diversification from the cooling domestic market,” the firm said.

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