Asian wealth hubs compete for assets of global tycoons
By Yuri Bender
Singapore is steaming ahead as Asia’s most proficient wealth management centre, but Hong Kong is expected to catch up once China’s struggling economy begins to recover.
The battle between financial centres for regional supremacy is not new. In Asian wealth management, Singapore and Hong Kong have long been the main protagonists.
According to the Singapore government’s Economic Development Board, 50 per cent of south-east Asia’s family businesses are in Singapore, with 1,400 single family offices now established. Consultancy Deloitte estimates that historically-dominant Hong Kong has 2,700 single family offices. But experts agree that it is Singapore which is currently in the ascendancy.
Most banks typically hedged their bets, investing resources in both hubs. They would set up offices in the Central Business District of Hong Kong, particularly premium value buildings such as the IFC, and Singapore’s sparkling new Marina Bay Financial Centre towers. But today, leading players are increasingly backing their most promising bets.
“We believe Singapore has become the Asian wealth management destination of choice for family offices over the last five years,” says Shee Tse Koon, group head of consumer banking and wealth management at DBS Bank, one of Singapore’s best known institutions.
It is the tropical City’s “attractive framework” of laws, regulations and tax breaks which he feels has attracted ultra-high net worth Asian entrepreneurs to set up shop there.
He is also seeing families from other regions establishing satellite offices in Singapore, as a base to channel capital into Asian investments. Families from China, India, south-east Asia and the US have moved to Singapore, which is becoming a “hotbed to catalyse and incubate new deals”, he adds.
While growth is still coming from ‘Greater China’ – particularly Taiwanese clients in AI-related industries keen to get further from Beijing’s reach – it is burgeoning business from India which Singapore’s banks are particularly keen to nail.
Currently there is a race for first-mover advantage in Indian wealth management, with banks building a “corridor” allowing onshore wealthy Indian families to diversify capital, by establishing a family office in Singapore. The next challenge, says Mr Shee, is around recruitment, “bringing together best-in-class Indian and Singaporean talent”.
Asian big money transfers
While Swiss bank Lombard Odier also has offices in Hong Kong and Tokyo, and sees China as a key market, it is Singapore’s “established wealth management system” and favourable tax regime which is boosting business.
“The growth of family offices in Singapore continues to be robust, fuelled by the great wealth transfer in Asia shaping the region’s wealth management landscape,” says Vincent Magnenat, Asia regional head and global head of strategic alliances at Lombard Odier.
Singapore is very much in the ascendancy, agrees Vineet Vohra, former regional wealth management boss with Citi, HSBC and ING, now running the Leader Circuit consultancy. It offers “a more compelling proposition than regional alternatives”, particularly due to ability to take advantage of regional wealth pools.
“Singapore’s wealth management industry knows the importance of having a China focus, as Singapore is a destination of choice for many, particularly those in Greater China,” affirms Mr Vohra, veteran of asset and wealth management firms in Singapore, Hong Kong and Mumbai. “However, it is not the only focus, and most industry participants balance that off with an equal, if not greater, emphasis on other wealth pools such as south-east Asia, south Asia, the Middle East and beyond.”
Talented managers
Much of Singapore’s success is also down to recent failures by competitors, believes Anant Deboor, a branding expert and head of strategy at Wunderman Thompson in Hong Kong.
While Singapore has “stolen a march” over Hong Kong, particularly due to its “ability to draw great talent in portfolio management”, Hong Kong has been plagued by some “own goals” in recent times.
The roots of this are traceable back to the 2019 to 2022 period, when the “shambolic handling of Covid” and political unrest from the previous Carrie Lam-led administration started to take Hong Kong backwards, says Mr Deboor.
“While Singapore’s leadership seized the opportunity, Hong Kong was struggling. To add to this pain, China’s economy, which Hong Kong is so reliant on, was also struggling,” he says.
But Hong Kong should never be written off. “Looking ahead, I still believe Hong Kong is just as important. The institutions and historic strengths in finance are still very much there. And as a market to raise capital, Hong Kong has far better strengths than Singapore,” he says.
“As south China’s economy starts to pick up – and it will – Hong Kong’s strengths will again start to assert themselves. Family offices have been showing increasing interest in alternative investments. This is a great opportunity for Hong Kong to shine again as the Asian leader.”
Gorillas in their midst
Despite growth in south-east Asian economies, Japan and India, “China still remains the 800lb gorilla,” believes Mr Deboor. “I doubt south-east Asia will be able to muster that level of clout. So, for most regional banks, they may consider Singapore as a smart base, but the big business will still be from north-east Asia.”
Major Chinese families are spreading their wealth across both centres, which is a “well thought-out decision”, according to William Chow, deputy group chief executive of the Raffles Family Office, handling the wealth of some of Asia’s richest tycoons.
As well as geographical proximities to major markets, natural disasters can also be a factor, says Mr Chow, speaking from his 23rd floor skyscraper office overlooking Hong Kong.
“Singapore doesn’t have typhoons that disrupt the market, but Hong Kong is also evolving and rolled out rules that allow the market to continue trading in extreme weathers,” he says. “In all, it’s not a zero-sum game and these two cities are not mutually exclusive.”
At leading global wealth manager UBS, the most significant recent investments have been in Hong Kong, with construction of a new 14-story tower in West Kowloon, managed by local real estate magnates Sung Hung Kai Properties. This is part of the 39km high-speed rail terminal, connecting to Shenzen – at the heart of president Xi Jinping’s Greater Bay Area project – on the Chinese Mainland in around 15 minutes.
Super connectors
“Hong Kong’s position as super connector to mainland China and established financial ecosystem continue to hold significant importance for investors,” says Amy Lo, chairman of UBS Global Wealth Management Asia.
“Singapore is one of the key destinations for wealth migration, but mainland China is still leading in wealth creation,” she says. While UBS expects both centres to remain “popular hubs” for billionaires, high net worth clients and family offices from Asia-Pacific and beyond – with the bank’s acquisition of the substantial Credit Suisse business in Singapore boosting its brand there – it is clear from the recent investments where its priorities lie.
“Hong Kong remains an international financial centre and attractive fund-raising platform,” says an enthusiastic Ms Lo. “With IPO activity picking up, it certainly will give a boost to the wealth management industry. The Greater Bay Area, home of 25 per cent of high net worth individuals in China, will be a key growth driver for Hong Kong to further consolidate its position.”
At HSBC, Lok Yim, regional head of global private banking, who shuttles between clients in both centres, shares similar sentiments. Asia is the group’s main growth region and while Hong Kong was always centre of operations, broadening the bank’s appeal across the region is his key remit. “South-east Asia shows significant growth potential, but Hong Kong remains crucial as gateway to mainland China,” he says, also trying to attract European and Middle Eastern clients, diversifying investments further from home.
But Mr Yim, previously with Deutsche Bank and Citi, is also aware that rival “emerging wealth hubs” Abu Dhabi and Dubai “have their own unique strengths for managing wealth”, providing increased competition for Hong Kong and Singapore. Others agree.
“You see a lot more family offices there and marketing of both Dubai and Abu Dhabi as Middle Eastern hubs,” says marketing strategist Mr Deboor. “A lot of Singaporean banks and wealth managers appear to be trying to funnel Chinese wealth away, and into safer destinations. It is quite possible the Middle-Eastern hubs are competing with Singapore rather than investing there.”
This article is from the FT Wealth Management hub
