Hong Kong has, for the first time, overtaken Switzerland to become the world's largest offshore asset management hub. As U.S.-China tensions and geopolitical uncertainty have mounted, the global wealthy have begun spreading assets across multiple countries, and in that process a large amount of Chinese money has flowed into Hong Kong, analysts say.
On the 27th, the Financial Times (FT) of the United Kingdom reported, citing a Boston Consulting Group (BCG) report, that the amount of international assets managed in Hong Kong last year reached $2.9 trillion. It surpassed Switzerland, the traditional world's largest "haven of wealth," for the first time.
About 60% of Hong Kong's assets were funds from mainland China. This means Hong Kong effectively monopolizes the role as a channel for overseas fund management by wealthy Chinese and corporations. BCG projected that as wealth in Asia grows rapidly, the gap between Hong Kong and Switzerland will widen to nearly $600 billion by 2030.
Behind Hong Kong's rise is the recently revived Hong Kong stock market. Chinese corporations are raising overseas funds through Hong Kong, and as China's manufacturing competitiveness, including in electric vehicles (EVs), grows, related money is also flowing into Hong Kong's financial markets.
However, some analysts say Hong Kong's ascent cannot be seen as merely a "China money" effect. After the coronavirus disease (COVID-19) pandemic, the war in Ukraine, and U.S.-China tensions, the view among the wealthy that "it is risky to keep assets in just one country" has spread rapidly. Michael Fellmann Roland of Swiss-based asset manager Baseline Wealth Management told the FT, "In the past, many offshore asset moves were for tax-saving purposes. Now, 'jurisdictional diversification' to avoid geopolitical risk has become the key reason."
According to the FT, the world's rich are in fact managing risk by spreading assets across multiple financial hubs such as Switzerland, Hong Kong, Singapore, and Dubai. BCG analyzed that the global wealth management market is currently bifurcating into an "Asia axis" and a "Western axis." Hong Kong and Singapore form the Asia axis, while Switzerland, the United States, and the United Arab Emirates (UAE) make up the Western axis.
In particular, Dubai is cited as one of the fastest-growing financial hubs in recent years. With virtually no taxes and relatively stable politics, money from wealthy individuals in Russia, China, India, and the Middle East is pouring in. Global banks such as UBS, JPMorgan, and Deutsche Bank have also moved aggressively to expand their businesses.
Switzerland's financial sector, by contrast, is growing increasingly uneasy. As UBS and Swiss financial authorities clash over strengthened capital regulations, some say "Switzerland is failing to actively defend its status as a wealth management powerhouse." Analysts say there are signs of cracks in Switzerland's standing, which once drew in the world's wealthy as the safe asset of a small neutral nation.