An Offshore Safe Haven
Recent protests in Hong Kong in response to a proposed law that would allow people to be extradited to Mainland China for trial have meant that the major offshore investment destination is experiencing political unease, causing a lack of security and stability for high net worth investors whom choose to channel their fortunes to the south-eastern city-state.
In particular, Chinese High Net Worth (HNW) investors, one of the major sources of business for private wealth managers in Hong Kong, will likely look for new homes for their fortunes. Cultural and geographic ties mean that Hong Kong is a popular booking centre for Chinese investors. However, should the extradition bill become reality, it will be possible for Mainland authorities to request Hong Kong courts to freeze and confiscate funds. While it is unlikely that established investors in the Hong Kong market will shift as a result of the protests, new HNW investors looking for a stable offshore financial centre will think twice.
Offshore centres that are able to successfully highlight their safe-haven status will capitalize on the situation in Hong Kong, in particular; the UK. Political factors have emerged as increasingly important determinants of not only economic but also financial market performance in recent years. Thus, being able to convey political stability is a must when looking to attract new global HNW investors.
With the uncertain future, HNW individuals from China will be looking for new homes to house their fortunes, and with the status of the UK rising around the world, regardless of Brexit, the UK is a stable destination for wealth and business to thrive. Moreover, the number of Chinese and Hong Kong nationals applying for a Tier 1 Investor Visa have jumped by 56 per cent, meaning they make up just under a third of all Investor Visa applicants.
Despite the ongoing challenges surrounding Brexit, Britain remains unfazed and the country continues to be the most attractive market for Foreign Direct Investment (FDI) in Europe. Global financial investors are also seemingly unconcerned and see the UK’s future prospects as positive with more than 65% not changing their investment plans following the Brexit vote, and 75% not planning to move their operations out of the UK. Britain’s attractiveness to foreign investors, especially from the far east, stems from its rule of law and business-friendly environment when looking to invest and grow a business, and with the UK economy continuing to grow, deeming a stable future.