Hong Kong Wealth Report 2014

Due to the country’s economic makeup, the rising success of the Chinese mainland and early preventive measures taken by the Hong Kong government, the financial crisis of 2008 had only a minor impact, causing a contraction in GDP of -2.5% in 2009, before rising to 6.8% in 2010. Hong Kong transformed into one of the world’s largest financial centers during the 1990s, operating a highly open economy with opportunities for both large and small private banks that countries such as China would not permit. The country’s regulatory environment also gives wealth-based businesses the flexibility to provide the best possible products to clients, while remaining profitable.

Hong Kong provides a high level of diversity in the private banking sector, which attracted the newly wealthy in China and Indonesia, and is a unique selling point in comparison to Singapore and Macau, where private banking is also a prominent influence in the local economies. The Hong Kong government, like many capitalist countries, aims to have the least possible influence on banking matters. Government intervention in banks can lead to inefficiencies that could influence products in the market, and also reduce levels of overseas investment.

Developments in regulation have also changed the way both domestic and foreign banks work in Hong Kong. Basel III and FATCA regulations have already been put into place, providing efficiency in the market, as well as building a strong relationship with the US. This are just two of the many positive steps being taken by Hong Kong private banks to ensure that regulations are met.

However, problems still remain in the local market. The lack of high-quality employees has increased the costs of operating in Hong Kong, which in turn reduces profits. This was evident by the withdrawal of Falcon Private Banking in early 2014, blaming the decision on rising costs. Recent protests in Hong Kong over democratic independence has caused further confusion over the country's private banking future, as less independence could cause China to eventually implement the same system they have in their own country in Hong Kong.

Scope

GlobalData's 'Hong Kong Wealth Report 2014' report details independent market sizing of Hong Kong’s HNWIs across five wealth bands.

An analysis of Hong Kong’s HNWI volume, wealth and allocation trends from 2009 to 2013.

A detailed forecast of HNWI volume, wealth and allocation to 2018.

A breakdown of the asset allocations of Hong Kong’s HNWIs and UHNWIs across 13 asset classes.

A geographical breakdown of all foreign assets held by Hong Kong’s HNWIs.

An alternative breakdown of liquid vs. investable assets.

Analysis of the overall size of Hong Kong’s wealth management industry.

The largest private banks by assets under management.

Detailed wealth management and family office information.

City ratings of wealth management saturation and potential.

Key Highlights

What is the total number of HNWIs in Hong Kong? How much wealth in US$ trillion do they currently hold?

What is the average total of wealth held by each HNWI in US$ million?

What has been the percentage increases in Hong Kong’s HNWI numbers in 2012 and 2013?

How substantial is the forecast growth in the number of Hong Kong’s HNWIs by 2018? By what percentage is HNWI wealth expected to grow in the same forecast period? How much will this be in total in US$ trillions?

How much of their wealth do Hong Kong’s HNWIs hold outside their home country? How does this compare to the global average?

Reasons to buy

Investigate a comprehensive analysis of the private banking and wealth management sector in Hong Kong and deliver your strategy to clients based on the most current market information.

Evaluate HNWI numbers and volumes in Hong Kong’s cities to target prospects precisely and ensure the cost efficiency of your operations.

Assess the proliferation of family offices in Hong Kong’s wealth market to identify where the competitive balance offers you the best chance to implement your expansion strategy.

Gain an understanding of the competitive landscape of the Hong Kong wealth management market to identify the key regulations and cultural variations that might potentially have negative repercussions for your competitive edge.

Investigate the five wealth bands detailed in the report to identify the preferences for wealth management services in each of these respective segments. Establish where your opportunities are in the market whilst minimizing your exposure to risk.

Companies mentioned

Hang Seng Bank Ltd

Bank of East Asia

Nanyang Commercial Bank

Wing Hang Bank Ltd

CITIC Bank International

Chi Yu Bank

Chong Hing Bank Ltd

Dah Sing Bank Ltd

Wing Lung Bank

Tai Sang Bank Ltd

Table of Contents

1 Introduction

1.1 Details of this Report

1.2 Definitions

2 Executive Summary

3 Wealth Sector Fundamentals

3.1 Political Background

3.2 Economic Background

3.3 Social Background

3.4 Benchmarking Hong Kong Wealth in Context

3.4.1 Distribution of wealth in Hong Kong

3.5 HNWI Volume and Wealth Trends

4 Findings from the WealthInsight HNWI Database

4.1 Trends in HNWI Wealth to 2018

4.1.1 HNWI trend analysis

4.1.2 Wealth band trends

4.1.3 Demographic breakdown of HNWIs

4.1.4 HNWIs – job titles

4.1.5 HNWIs – industry breakdown

4.1.6 HNWIs – industry performance

4.1.7 HNWIs – breakdown by city

4.1.8 HNWIs – city performance

4.1.9 HNWIs – city population densities

4.1.10 HNWIs – city forecasts

4.1.11 HNWIs – breakdown by state

4.1.12 HNWIs – state performance

4.1.13 HNWIs – state population densities

4.2 UHNWIs

4.2.1 UHNWI volume trend analysis

4.2.2 UHNWI wealth trend analysis

4.2.3 Demographic breakdown of UHNWIs

4.2.4 UHNWIs – industry breakdown

4.2.5 UHNWIs – city breakdown and performance

4.3 UHNWIs – Billionaires

4.3.1 Billionaire volume trend analysis

4.3.2 Billionaire wealth trend analysis

4.3.3 Billionaire per capita net worth trend analysis

4.3.4 List of billionaires

4.4 UHNWIs – Centimillionaires

4.4.1 Centimillionaire volume trend analysis

4.4.2 Centimillionaire wealth trend analysis

4.4.3 Centimillionaire per capita net worth trend analysis

4.5 UHNWIs – Affluent Millionaires

4.5.1 Affluent millionaire volume trend analysis

4.5.2 Affluent millionaire wealth trend analysis

4.5.3 Affluent millionaire per capita net worth trend analysis

4.6 Core HNWIs

4.6.1 Core HNWI volume trend analysis

4.7 Core HNWIs – Mid-Tier Millionaires

4.7.1 Mid-tier millionaire volume trend analysis

4.7.2 Mid-tier millionaire wealth trend analysis

4.7.3 Mid-tier millionaire per capita net worth trend analysis

4.8 Core HNWIs – Lower-Tier Millionaires

4.8.1 Lower-tier millionaire volume trend analysis

4.8.2 Lower-tier millionaire wealth trend analysis

4.8.3 Lower-tier millionaire per capita net worth trend analysis

5 Analysis of Hong Kong HNWI Investments

5.1 Analysis by Asset Class

5.1.1 Trends in alternative assets

5.1.2 Trends in ‘art, wine and wheels’

5.1.3 Trends of investments in real estate

5.1.4 Trends of investments in cash and deposits

5.1.5 Trends of investments in fixed-income

5.1.6 Investment trends in equity

5.1.7 Investments trends in business interests

5.2 Analysis of Foreign Investments

5.2.1 Investments in Europe

5.2.2 Investments in North America (including the US, Mexico and the Caribbean)

5.2.3 Investments in Asia-Pacific

5.2.4 Investments in Central and South America

5.2.5 Investments in the Middle East

5.2.6 Investments in Africa

5.3 Alternative Breakdown: Liquid vs. Investable Assets

5.4 Analysis of Hong Kong UHNWI Investments

6 Competitive Landscape of the Wealth Sector

6.1 Competitive Landscape

6.1.1 Domestic private banks

6.1.2 Foreign private banks

6.1.3 Wealth managers

6.1.4 Family offices

6.1.5 Financial advisors

6.2 Developments in the Hong Kong Private Banking Industry

6.3 Wealth Management and the Private Banking Industry

6.4 Hong Kong Wealth Management Industry – Clientele Model and Maturity

6.5 Behavioral Mapping of Wealth Management and Private Banking in Hong Kong

6.6 Porter’s Five Force Analysis – the Wealth Management Industry

7 Appendix

7.1 Additional Components of the Wealth Sector in Hong Kong

7.1.1 Philanthropy

7.2 Tax Regulations

7.3 Regulations Related to Immigration, Investment and Employment

7.4 Key Drivers

7.4.1 HKD to US$ exchange rate

7.4.2 Real GDP growth

7.4.3 Per capita GDP

7.4.4 Domestic market capitalization

7.4.5 Commodity index

7.4.6 Foreign direct investments – inflow and outflow

7.4.7 Inflation rate

7.4.8 Interest rate

7.4.9 Balance of payments

7.4.10 Government debt

7.4.11 Stock market performance

7.5 Wealth Breakdowns

8 About WealthInsight

List of Tables

Table 1: HNWI Wealth Band and Group Definitions

Table 2: Regions in Hong Kong by Population (Volume), 2013

Table 3: Hong Kong HNWIs – Volume Distribution (%), 2013

Table 4: Hong Kong HNWIs – Wealth Distribution Wealth Pyramid (%), 2013

Table 5: Hong Kong HNWIs – Industry Performance, 2009–2013

Table 6: Hong Kong HNWIs – Cities, 2013

Table 7: Hong Kong HNWI Growth in Top Cities (Thousand), 2009–2013

Table 8: Hong Kong HNWI Population Density in Major Cities (Thousand), 2013

Table 9: Hong Kong HNWIs in Top Cities (Thousand), 2009–2018

Table 10: Hong Kong HNWIs – Growth Rates for Top Cities (%), 2009–2018

Table 11: Hong Kong Volume of HNWI by States (Thousand), 2013

Table 12: Hong Kong HNWI State Performance (%), 2009–2013

Table 13: Hong Kong HNWIs Population Density by State (Thousand), 2013

Table 14: Hong Kong UHNWI Gender Performance (%), 2009–2013

Table 15: Hong Kong UHNWI Source of Wealth (%), 2013

Table 16: Hong Kong Volume of UHNWI in Top Cities (Hundred), 2009–2018

Table 17: Hong Kong UHNWI Growth Rates in Top Cities (%), 2009–2018 4

Table 18: Hong Kong Billionaires Market Overview (Volume and US$ Billion), 2009–2018

Table 19: Hong Kong Top-10 Billionaires (US$ Billions), 2013

Table 20: Hong Kong Billionaire Wealth Growth (US$ Billion), 2009−2013

Table 21: Hong Kong Centimillionaires Market Overview (Volume and US$ Million/Billion), 2009–2018

Table 22: Hong Kong Affluent Millionaires Market Overview (Volume and US$ Million/Billion), 2009–2018

Table 23: Hong Kong Mid-Tier Millionaires Market Overview (Volume and US$ Million/Billion), 2009–2018

Table 24: Hong Kong Lower-Tier Millionaires Market Overview (Volume and US$ Million/Billion), 2009–2018

Table 25: Hong Kong Allocations of HNWI Assets (%), 2009–2018

Table 26: Hong Kong HNWI Holdings Growth (%), 2009–2018

Table 27: Hong Kong HNWI Alternative Asset Composition (%), 2009–2018

Table 28: Hong Kong HNWI Trends of Investments in Alternative Assets (%), 2009–2018

Table 29: Hong Kong Trends in ‘Art, Wine and Wheels’, 2009–2013

Table 30: Global Prime Real Estate Prices per m2 (US$), 2014

Table 31: Hong Kong HNWI Foreign Investment Allocations (%), 2009–2018

Table 32: Hong Kong HNWI Liquidity Breakdown (US$ Billion), 2009–2018

Table 33: Hong Kong HNWI Liquidity Breakdown (%), 2009–2018

Table 34: Hong Kong UHNWI Allocations and Share of HNWI Assets (%), 2013

Table 35: Leading Domestic Private Banks in Hong Kong by local AuM (US$ Million), 2013

Table 36: Leading Foreign Private Banks in Hong Kong by local AuM (US$ million), 2013

Table 37: Leading Wealth Managers in Hong Kong by AuM (US$m), 2013

Table 38: Leading Family Offices in Hong Kong by AuM (US$m), 2013

Table 39: Wealth Management Industry – Recent Deal Activity in Hong Kong, 2014/2013

Table 40: Hong Kong Income Tax Bands (HKD), 2013–2014

Table 41: HKD per US$ Exchange Rate, 2009–2018

Table 42: Hong Kong Real GDP Growth (%), 2009–2018

Table 43: Hong Kong GDP per Capita (US$), 2009–2018

Table 44: Hong Kong Domestic Market Capitalization (US$ Billion), 2009–2013

Table 45: Hong Kong Commodity Indices, 2009–2018

Table 46: Hong Kong Foreign Direct Investment (US$ Billion), 2007–2011

Table 47: Hong Kong Inflation Rate (%), 2009–2018

Table 48: Hong Kong Money Market Rate (%), 2009–2018

Table 49: Hong Kong Balance of Payments (US$ Billion), 2009–2013

Table 50: Hong Kong Government Debt as a Percentage of GDP, 2009–2018

Table 51: Hong Kong Stock Market Performance, 2009–2013

Table 52: Hong Kong HNWI Wealth vs GDP Ratio, 2009–2018

Table 53: Hong Kong – Appendix One

Table 54: Hong Kong – Appendix Two

List of Figures

Figure 1: HNWI Wealth Band Definitions

Figure 2: Map of Hong Kong

Figure 3: Hong Kong Asset Price Performance (%), 2009–2013

Figure 4: Hong Kong HNWI Performance (US$ Billions and HNWI Volume), 2009–2018

Figure 5: Hong Kong vs Global HNWIs (%), 2009–2018

Figure 6: Hong Kong HNWIs – Growth Factor Correlation, 2009–2013

Figure 7: Hong Kong HNWIs – Wealth Pyramid (Volume Distribution), 2013

Figure 8: Hong Kong HNWIs – Wealth Pyramid (Volume Distribution), 2013

Figure 9: Hong Kong HNWIs – Age Distribution (%), 2013

Figure 10: Hong Kong HNWIs – Job Titles (%), 2009–2013

Figure 11: Hong Kong HNWIs – Distribution by Industry (%), 2013

Figure 12: Hong Kong HNWIs – City Performance (%), 2009–2013

Figure 13: Hong Kong HNWIs – Volume of HNWIs by City (Thousand), 2009 and 2013

Figure 14: Hong Kong HNWIs – City Forecasts (%), 2014–2018

Figure 15: Hong Kong Volume of HNWI by City (Thousand), 2014–2018

Figure 16: Hong Kong UHNWI Wealth Share vs Volume Growth (%), 2009–2013

Figure 17: Hong Kong UHNWI Volume by Wealth Band (Thousand), 2009–2018

Figure 18: Hong Kong UHNWI Wealth by Wealth Band (US$ Billion), 2009–2018

Figure 19: Hong Kong UHNWI Age Distribution (Percentage Share), 2013

Figure 20: Hong Kong UHNWI Distribution by Industry (%), 2013

Figure 21: Hong Kong Billionaires Market Overview (Volume and US$ Billion), 2009–2018

Figure 22: Hong Kong Centimillionaires Market Overview (Volume and US$ Million/Billion), 2009–2018

Figure 23: Hong Kong Affluent Millionaires Market Overview (Volume and US$ Million/Billion), 2009–2018

Figure 24: Hong Kong Mid-Tier Millionaires Market Overview (Volume and US$ Million/Billion), 2009–2018

Figure 25: Hong Kong Lower-Tier Millionaires Market Overview (Volume and US$ Million/Billion), 2009–2018

Figure 26: Hong Kong HNWI Asset Class Composition (%), 2009–2018

Figure 27: Hong Kong HNWI Trends in Alternative Assets (US$ Billion), 2009–2018

Figure 28: Hong Kong Trends in ‘Art, Wine and Wheels’, 2009–2013

Figure 29: Hong Kong HNWI Foreign Investment Allocation and Growth (%), 2013

Figure 30: Hong Kong HNWI Global Distribution of Foreign Investments (%), 2009–2018

Figure 31: Hong Kong HNWI Liquidity Breakdown (%), 2009–2018

Figure 32: Hong Kong UHNWI Asset Class Composition (%), 2009–2018

Figure 33: Hong Kong Wealth Management Industry – Maturity Level of Operators, 2014

Figure 34: Hong Kong Wealth Management Industry Behavioral Mapping, 2013

Figure 35: Hong Kong Wealth Management Industry – Five Forces Analysis

Figure 36: HKD to US$ Exchange Rate, 2009–2018

Figure 37: Hong Kong Real GDP Growth (%), 2009–2018

Figure 38: Hong Kong GDP per Capita (US$), 2009–2018

Figure 39: Hong Kong Domestic Market Capitalization (US$ Billion), 2009–2013

Figure 40: Hong Kong Commodity Indices, 2009–2018

Figure 41: Hong Kong Foreign Direct Investment (US$ Billion), 2007–2011

Figure 42: Hong Kong Inflation Rate (%), 2009–2018

Figure 43: Hong Kong Money Market Rate (%), 2009–2018

Figure 44: Hong Kong Balance of Payments (US$ Billion), 2009–2013

Figure 45: Hong Kong Government Debt as a Percentage of GDP, 2009–2018

Figure 46: Hong Kong Stock Market Performance, 2009–2013

Figure 47: Hong Kong HNWI Wealth vs GDP Ratio, 2009–2018

Figure 48: Hong Kong HNWIs – Volume by Wealth Band, 2009–2018

Figure 49: Hong Kong HNWIs – Wealth by Wealth Band (US$ Billion), 2009–2018

Figure 50: Hong Kong HNWIs – Wealth per Capita (US$ Million), 2009–2018

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