Hong Kong Wealth Report 2015

Despite unfavorable world market conditions, the wealth management market in Hong Kong is emerging. It is attractive not only to local developers but foreign institutions. Much of the growth in Hong Kong’s wealth management and private banking sector has been driven by the country’s volume of HNWIs and UHNWIs during the last decade.

Different HNWI bands respond differently to economic changes due to differing asset allocations, with UHNWIs tending to have higher alternative and business interest holdings, while core HNWIs and lower-tier millionaires tend to place a larger share of their assets in cash and property. Lower-tier millionaires were the largest wealth band by volume in Hong Kong in 2014, followed by mid-tier millionaires.

Core millionaires (lower- and mid-tier millionaires) accounted for 60.9% of Hong Kong HNWI wealth in 2014. The remaining wealth bands together form UHNWIs, who accounted for 39.1% of total HNWI wealth. Lower-tier millionaires were the largest HNWI wealth band in 2014, accounting for 41.0% of Hong Kong HNWIs’ total wealth, followed by mid-tier millionaires with 19.9%.

Scope

• An independent market sizing of Hong Kong’s HNWIs across five wealth bands

• Analysis of Hong Kong’s HNWI volume, wealth and allocation trends from 2010 to 2014

• A detailed forecast of HNWI volume, wealth and allocation to 2019

• 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 have been the increases in Hong Kong’s HNWI numbers in 2013 and 2014?

How substantial is the forecast growth in the number of Hong Kong’s HNWIs by 2019? 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 ensure you are equipped with the most current market information

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

• Assess the proliferation of family offices in Hong Kong’s wealth market to identify gaps in the market that offer the best return on investment

• 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 impact on your competitive advantage

• 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

Chi Yu Bank

Bank of East Asia Ltd

HSBC Private Banking

Standard Charted Bank (Hong Kong) Ltd

Nomura International (Hong Kong) Ltd

Vontobel Wealth Management (Hong Kong) Ltd

The Henley Group Ltd

RBC Trust Company

Table of Contents

1 Introduction

1.1 Details of this Report

1.2 Definitions

2 Executive Summary

3 Wealth Sector Fundamentals

4 Distribution of Wealth in Hong Kong

4.1 HNWI Volume and Wealth Trends

5 Findings from the WealthInsight HNWI Database

5.1 Trends in HNWI Wealth to 2019

5.1.1 HNWI trend analysis

5.1.2 Wealth band trends

5.1.3 Demographic breakdown of HNWIs

5.1.4 HNWIs – job titles

5.1.5 HNWIs – industry breakdown

5.1.6 HNWIs – industry performance

5.1.7 HNWIs – breakdown by city

5.1.8 HNWIs – city performance

5.1.9 HNWIs – city population densities

5.1.10 HNWIs – city forecasts

5.2 UHNWIs

5.2.1 UHNWI volume trend analysis

5.2.2 UHNWI wealth trend analysis

5.2.3 Demographic breakdown of UHNWIs

5.2.4 UHNWIs – industry breakdown

5.2.5 UHNWIs – city breakdown and performance

5.3 UHNWIs – Billionaires

5.3.1 Billionaire volume trend analysis

5.3.2 Billionaire wealth trend analysis

5.3.3 Billionaire per capita net worth trend analysis

5.3.4 List of billionaires

5.4 UHNWIs – Centimillionaires

5.4.1 Centimillionaire volume trend analysis

5.4.2 Centimillionaire wealth trend analysis

5.4.3 Centimillionaire per capita net worth trend analysis

5.5 UHNWIs – Affluent Millionaires

5.5.1 Affluent millionaire volume trend analysis

5.5.2 Affluent millionaire wealth trend analysis

5.5.3 Affluent millionaire per capita net worth trend analysis

5.6 Core HNWIs

5.6.1 Core HNWI volume trend analysis

5.7 Core HNWIs – Mid-Tier Millionaires

5.7.1 Mid-tier millionaire volume trend analysis

5.7.2 Mid-tier millionaire wealth trend analysis

5.7.3 Mid-tier millionaire per capita net worth trend analysis

5.8 Core HNWIs – Lower-Tier Millionaires

5.8.1 Lower-tier millionaire volume trend analysis

5.8.2 Lower-tier millionaire wealth trend analysis

5.8.3 Lower-tier millionaire per capita net worth trend analysis

6 Analysis of Hong Kong HNWI Investments

6.1 Analysis by Asset Class

6.1.1 Trends in alternative assets

6.1.2 Trends in ‘art, wine and wheels’

6.1.3 Trends of investment in real estate

6.1.4 Trends of investment in cash and deposits

6.1.5 Trends of investment in fixed-income

6.1.6 Investment trends in equity

6.1.7 Investments trends in business interests

6.2 Analysis of Foreign Investments

6.2.1 Investments in Europe

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

6.2.3 Investments in Asia-Pacific

6.2.4 Investments in South America

6.2.5 Investments in the Middle East

6.2.6 Investments in Africa

6.3 Alternative Breakdown: Liquid vs Investable Assets

6.4 Analysis of Hong Kong UHNWI Investments

7 Competitive Landscape

7.1 Additional Components of the Wealth Sector in Hong Kong

7.1.1 Domestic private banks

7.1.2 Foreign Private Banks

7.1.3 Wealth managers

7.1.4 Family offices

7.1.5 Financial advisors

7.2 Key Drivers

7.2.1 HKD to US$ exchange rate

7.2.2 Real GDP growth

7.2.3 Per capita GDP

7.2.4 Domestic market capitalization

7.2.5 Commodity index

7.2.6 Foreign direct investments (FDI) – inflows and outflows

7.2.7 Inflation rate

7.2.8 Interest rate

7.2.9 Balance of payments

7.2.10 Government debt

7.2.11 Stock market performance

7.3 Wealth Breakdowns

8 About WealthInsight

List of Tables

Table 1: HNWI Wealth Band and Group Definitions

Table 2: Hong Kong HNWIs – Volume Distribution (%), 2014

Table 3: Hong Kong HNWIs – Wealth Distribution Wealth Pyramid (%), 2014

Table 4: Hong Kong HNWIs – Industry Performance (%), 2010–2014

Table 5: Hong Kong HNWIs – Cities, 2014

Table 6: Hong Kong HNWI Growth in Top Cities (Thousand), 2010–2014

Table 7: Hong Kong HNWIs Population Density in Major Cities (Thousand), 2014

Table 8: Hong Kong HNWIs in Top Cities (Thousand), 2010–2019

Table 9: Hong Kong HNWIs – Growth Rates for Top Cities (%), 2010–2019

Table 10: Hong Kong HNWI Source of Wealth (%), 2014

Table 11: Hong Kong UHNWI Gender Performance (%), 2010–2014

Table 12: Hong Kong Volume of UHNWI in Top Cities, 2010–2019

Table 13: Hong Kong UHNWIs Growth Rates for Top Cities (%), 2010–2019

Table 14: Hong Kong Billionaires Market Overview (Volume and US$ Billion) 2010–2019

Table 16: Hong Kong Billionaire Wealth Growth (US$ Billion), 2010−2014

Table 15: Hong Kong Top-10 Billionaires (US$ Billion), 2014

Table 17: Hong Kong Centimillionaires Market Overview (Volume and US$ Million/Billion), 2010–2019

Table 18: Hong Kong Affluent Millionaires Market Overview (Volume and US$ Million/Billion), 2010–2019

Table 19: Hong Kong Mid-Tier Millionaires Market Overview (Volume and US$ Million/Billion), 2010–2019

Table 20: Hong Kong Lower-Tier Millionaires Market Overview (Volume and US$ Million/Billion), 2010–2019

Table 21: Hong Kong Allocations of HNWI Assets (%), 2010–2019

Table 22: Hong Kong HNWIs − Holdings Growth (%), 2010–2019

Table 23: Hong Kong HNWI Alternative Asset Composition (%), 2010–2019

Table 24: Hong Kong HNWI Trends of Investments in Alternative Assets (%), 2010–2019

Table 25: Hong Kong Trends in ‘Art, Wine and Wheels’, 2010–2014

Table 26: Global Prime Real Estate Prices per m2 (US$), 2014

Table 27: Hong Kong HNWI Foreign Investment Allocations (%), 2010–2019

Table 28: Hong Kong HNWI Liquidity Breakdown (US$ Billion), 2010–2019

Table 29: Hong Kong HNWI Liquidity Breakdown (%), 2010–2019

Table 30: Hong Kong UHNWI Allocations and Share of HNWI Assets (%), 2014

Table 32: HKD to US$ Exchange Rate, 2010–2019

Table 33: Hong Kong Real GDP Growth (%), 2010–2019

Table 34: Hong Kong GDP Per Capita (US$), 2010–2019

Table 35: Hong Kong Domestic Market Capitalization (US$ Billion), 2010–2014

Table 36: Hong Kong Commodity Indices, 2010–2019

Table 37: Hong Kong Foreign Direct Investments (US$ Billion), 2010–2019

Table 38: Hong Kong Inflation Rate (%), 2010–2019

Table 39: Hong Kong Money Market Rate (%), 2010–2019

Table 40: Hong Kong Balance of Payments (US$ Billion), 2010–2014

Table 41: Hong Kong Government Debt as a Percentage of GDP (%), 2010–2019

Table 42: Hong Kong Stock Market Performance (Index), 2010–2014

Table 43: Hong Kong HNWI Wealth vs. GDP Ratio (%), 2010–2019

Table 44: Hong Kong– Appendix One

Table 45: 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 (%), 2010–2014

Figure 4: Hong Kong HNWI Performance (US$ Billion and HNWI Volume), 2010–2019

Figure 5: Hong Kong vs Global HNWIs (%), 2010–2019

Figure 6: Hong Kong HNWIs – Growth Factor Correlation, 2010–2014

Figure 7: Hong Kong HNWIs – Wealth Pyramid (Volume Distribution), 2014

Figure 8: Hong Kong HNWIs – Wealth Pyramid (Volume Distribution), 2014

Figure 9: Hong Kong HNWIs – Age Distribution (%), 2014

Figure 10: Hong Kong HNWIs – Job Titles (%), 2010–2014

Figure 11: Hong Kong HNWIs – Distribution by Industry (%), 2014

Figure 12: Hong Kong HNWIs – City Performance (%), 2010–2014

Figure 13: Hong Kong HNWIs – Volume of HNWIs by city (Thousand), 2010 and 2014

Figure 14: Hong Kong HNWIs – City Forecasts (%), 2015–2019

Figure 15: Hong Kong Volume of HNWIs by City (Thousand), 2015–2019

Figure 16: Hong Kong UHNWIs Wealth Share vs Volume Growth (%), 2010–2014

Figure 17: Hong Kong UHNWIs Volume by Wealth Band (Thousand), 2010–2019

Figure 18: Hong Kong UHNWI Wealth by Wealth Band (US$ Billion), 2010–2019

Figure 19: Hong Kong UHNWI Age Distribution (Percentage Share), 2014

Figure 20: Hong Kong UHNWI Distribution by Industry (%), 2014

Figure 21: Hong Kong Billionaires Market Overview (Volume and US$ Billion), 2010–2019

Figure 22: Hong Kong Centimillionaires Market Overview (Volume and US$ Million/Billion), 2010–2019

Figure 23: Hong Kong Affluent Millionaires Market Overview (Volume and US$ Million/Billion), 2010–2019

Figure 24: Hong Kong Mid-Tier Millionaires Market Overview (Volume and US$ Million/Billion), 2010–2019

Figure 25: Hong Kong Lower-Tier Millionaires Market Overview (Volume and US$ Million/Billion), 2010–2019

Figure 26: Hong Kong HNWI Asset Class Composition (%), 2010–2019

Figure 27: Hong Kong HNWI Trends in Alternative Assets (US$ Billion), 2010–2019

Figure 28: Hong Kong Trends in ‘Art, Wine and Wheels’, 2010–2014

Figure 29: Hong Kong HNWI Foreign Investment Allocation and Growth (%), 2014

Figure 30: Hong Kong HNWIs – Global Distribution of Foreign Investments (%), 2010–2019

Figure 31: Hong Kong HNWI Liquidity Breakdown (%), 2010–2019

Figure 32: Hong Kong UHNWI Asset Class Composition (%), 2010–2019

Figure 33: Hong Kong Exchange Rate – RUB to US$, 2010–2019

Figure 34: Hong Kong Real GDP Growth (%), 2010–2019

Figure 35: Hong Kong GDP Per Capita (US$), 2010–2019

Figure 36: Hong Kong Domestic Market Capitalization (US$ Billion), 2010–2014

Figure 37: Hong Kong Commodity Indices, 2010–2019

Figure 38: Hong Kong Foreign Direct Investments (US$ Billion), 2010–2019

Figure 39: Hong Kong Inflation Rate (%), 2010–2019

Figure 40: Hong Kong Money Market Rate (%), 2010–2019

Figure 41: Hong Kong Balance of Payments (US$ Billion), 2010–2014

Figure 42: Hong Kong Government Debt as a Percentage of GDP (%), 2010–2019

Figure 43: Hong Kong Stock Market Performance (Index), 2010–2014

Figure 44: Hong Kong HNWI Wealth vs. GDP Ratio (%), 2010–2019

Figure 45: Hong Kong HNWIs – Volume by Wealth Band, 2010–2019

Figure 46: Hong Kong HNWIs – Wealth by Wealth Band (US$ Billion), 2010–2019

Figure 47: Hong Kong HNWIs – Wealth per Capita (US$ Million), 2010–2019

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