Economic and political uncertainty drives HNWI holdings offshore
Asia-Pacific (excl. Japan) HNWIs lead the world in offshore-held wealth. Hong Kong has by far the most internationally minded HNWIs, although HNWIs from all markets within the region hold at least one-third of their financial wealth abroad.
There are a wide variety of preferred offshore destinations for Asia-Pacific HNWIs, with Hong Kong and Singapore preferred overall. Hong Kong is preferred by Chinese HNWIs, while Singapore attracts HNWI wealth from Southeast Asian markets of India, Indonesia, and Malaysia. New York and London also are favored offshore centers for HNWIs in several markets, most notably Japan, Australia, and Hong Kong.
Concerns about economic/financial markets and political risk are driving offshore wealth for both emerging markets and mature markets in Asia-Pacific. Emerging-market HNWIs cited economic/market risk as the number-one driver. Both emerging and mature market HNWIs had political risk concerns as the number-three driver.
The industry, especially in the key financial centers of Hong Kong and Singapore, will need to invest further in talent, product, risk and compliance, and technology to meet the HNWI demand for offshore wealth management. At the same time, an early trend is developing towards increased localization of wealth management. The established offshore centers will need to anticipate and compete with such localization via ongoing investment in key capabilities.
HNWI Financial Assets held Outside the Home Market, Q2 2017
Note: Question asked: “Approximately what percentage of your financial assets is held (booked) in your home market?”; The numbers above were calculated by deducting the total financial assets held in the home country from the total HNWI assets (100%)
Source: Capgemini Financial Services Analysis, 2017; Capgemini Global HNW Insights Survey 2017