Abstract
Introduction
Hong Kong has taken its place as one of the leading financial centers of the
world. The wealth market is rapidly developing as an asset management
industry, given its proximity to the growing Mainland China market. The
domestic affluent population is large enough to be attractive to international
wealth managers, even before its substantial offshore client base is taken
into consideration.
Features and benefits
- Build your customer targeting strategy using in-depth HNW demographics and
needs analysis based on Datamonitor' s annual Global Wealth Manager Survey
- Assess your competition through detailed profiles of notable players,
including the customer targeting, marketing and product strategies they employ.
- Size your potential client base using Datamonitor' s proprietary data,
presenting the number of affluent individuals by liquid asset band to 2014.
Highlights
Growth in the value of the assets held onshore by Hong Kong HNW investors is
forecast to be strong over the next four years. Much of the growth in asset
values will be underpinned by the exposure of Hong Kong to the economic growth
story of China through its development as the offshore Renminbi trading centre
of choice.
The HNW market in Hong Kong is dominated by male entrepreneurs or business
owners aged 31 - 50, in contrast to the wider Asia Pacific region which has a
more evenly distributed age and gender profile. In terms of life stages these
individuals are also very likely to be coping with the demands of family and
at-home children.
Numerous wealth management business models operate in the Hong Kong market.
Foreign banks compete alongside local and regional giants as well as Hong Kong
and Mainland asset managers. Competitors profiled include: Citibank, CITIC
Bank International, DBS, Guotai Junan International, Hang Seng Bank and Julius
Baer.
Your key questions answered
- What strategies are my competition employing to win and keep affluent
clients?
- What is the potential market for a private banking or mass affluent
proposition in Hong Kong?
- What are the most effective acquisition techniques that I should use to
build up my client base?
- What products and services will have the strongest client demand going
forward?
Table of Contents
OVERVIEW
- Catalyst
- Summary
- Methodology
EXECUTIVE SUMMARY
- The Hong Kong economy is led by a strong services sector
- The HKMA acts as the country' s central bank
- Recent legislation has been aimed at calming the property market and
expanding renminbi business
- Hong Kong' s affluent population is yet to recover to pre-crisis levels
- Hong Kong has an established offshore market
- Wealth managers must choose between Singapore and Hong Kong
- The Hong Kong HNW customer has a high risk appetite
- The market consists of both bank-led and asset management-led players
- Competitor developments focus on key growth strategies
- Profiled competitors have been chosen to highlight the various wealth
management business models
SIZING AND FORECASTING THE AFFLUENT MARKET IN HONG KONG
- Macroeconomic overview
- Macroeconomic trends and performance
- GDP
- Inflation
- Interest rates
- Stock market capitalization
- Income distribution
- Regulation of wealth management in Hong Kong
- Key institutions and players
- Recent legislation
- Sizing the onshore affluent population in Hong Kong
- Hong Kong' s affluent population as a proportion of total population is
the second highest in Asia Pacific
- The number of affluent individuals in Hong Kong continues to increase
- Value of liquid assets in Hong Kong
- The offshore market in Hong Kong
- The offshore fund management industry continues to outsize the onshore
industry
- Hong Kong and Singapore are competing for offshore clients
- The largest proportion of offshore assets under management come from Asia
HNW CUSTOMERS IN HONG KONG
- The makeup of the typical Hong Kong HNW investor
- The majority of Hong Kong HNW individuals are between 31 and 50 years
old, giving them little time to manage their wealth
- Men account for the majority of HNW individuals in Hong Kong
- The largest proportion of HNW investors have amassed their fortunes
through business/entrepreneurship
- With one of the leading global stock markets, Hong Kong HNW individuals
invest significantly in equities
- In broad asset class terms, Hong Kong HNW investors place the largest
proportion of their portfolio into equities
- Detailed asset class analysis shows Hong Kong HNW individuals largely
invest in equities and corporate bonds
- Over the next two years, cash or near-cash and fixed income products
will increase in popularity
- Demand for asset management services and selected lending products is high
- There is high demand for advisory asset management, mortgages, and
margin lending among Hong Kong HNW individuals
- Hong Kong HNW individuals currently show a strong appetite for advisory
asset management
- Looking forward two years, high demand for advisory asset management
will persist
- There is varying demand for products and services beyond asset management
- Within the next two years, demand for planning services and insurance
will increase
- Hong Kong HNW investors have a high risk appetite, supported by a strong
understanding of financial products
- Hong Kong HNW investors have a higher risk appetite than the regional
average
- Hong Kong HNW individuals demand face-to-face contact from their wealth
managers
- Hong Kong HNW investors are less loyal to their wealth manager than the
regional average
- HNW individuals in Hong Kong spread their assets across numerous wealth
managers
- There is little risk that Hong Kong HNW investors will leave to manage
their money on their own
- Existing client referrals are the most successful method of acquiring
new clients
- Aside from referrals from existing clients, no other method of client
acquisition has proven to be highly successful
COMPETITOR DEVELOPMENTS IN HONG KONG WEALTH MANAGEMENT
- Business models of Hong Kong wealth managers
- There are numerous domestic and foreign banks operating in Hong Kong
- There are also numerous asset-management led players
- Competitor trends
- Notable global wealth managers have been expanding in Hong Kong
- M&A developments underline the significance of Hong Kong to the Asian
growth story
- Chinese banks are launching services to cater for the increasingly
international needs of their mainland clients
- Hong Kong' s efforts to develop the country as an Asian asset management
center are not going unnoticed
- Growing international demand for access to Hong Kong will place greater
emphasis on efficient wealth management systems
- Key competitors in Hong Kong wealth management
- Competitor profile: Citibank
- Competitor profile: CITIC Bank International
- Competitor profile: DBS
- Competitor profile: Guotai Junan International
- Competitor Profile: Hang Seng Bank
- Competitor profile: Julius Baer
APPENDIX
- Supplementary data
- Asia Pacific stock market capitalization by major exchanges
- Definitions
- High net worth (HNW)
- Liquid assets
- Mass affluent
- Measures of growth
- Onshore
- Methodology
- Overall methodology
- Global Wealth Managers Survey 2011
- Global Wealth Model methodology
- Selected bibliography
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
TABLES
- Table: Competitor profiles by business model
- Table: Key macroeconomic data for Hong Kong
- Table: The three tiers of Hong Kong' s banking system
- Table: Affluent population as a percentage of total population in selected
global wealth markets, 2010
- Table: Number of mass affluent individuals by asset band (000s), 2006-10
- Table: Number of mass affluent individuals by asset band (000s), 2011-14
- Table: Number of HNW individuals by asset band (000s), 2006-10
- Table: Number of HNW individuals by asset band (000s), 2011-14
- Table: Value of liquid assets held by the mass affluent population ($bn),
2006-10
- Table: Value of liquid assets held by the mass affluent population ($bn),
2011-14
- Table: Value of liquid assets held by the HNW population ($bn), 2006-10
- Table: Value of liquid assets held by the HNW population ($bn), 2011-14
- Table: Tax systems of Hong Kong and Singapore
- Table: Locally incorporated fully licensed banks offering wealth management
- Table: Foreign bank-led wealth managers operating in the Hong Kong market
- Table: Foreign and domestic asset management-led players operating in the
Hong Kong market
- Table: Selected Chinese fund managers and brokerages with Hong Kong
subsidiaries that could benefit from the mini-QFII scheme
- Table: Competitor profiles by business model
- Table: Citibank wealth management brands, 2011
- Table: CITIC Bank International wealth management brands, 2011
- Table: CITIC Bank International performance data, 2010
- Table: DBS wealth management brands, 2011
- Table: DBS Group performance data, 2010
- Table: Han Seng wealth management brands, 2011
- Table: Hang Seng' s property services, 2011
- Table: Hang Seng Bank performance data, 2010
- Table: Julius Baer Group performance data, 2010
- Table: Stock market capitalization of the major Asia Pacific exchanges
($bn), 2006 - 10
FIGURES
- Figure: Hong Kong has the seventh largest economy in Asia Pacific
- Figure: The Hong Kong economy contracted in 2009, before recovering
strongly in 2010
- Figure: Inflationary pressures will intensify if measures are not taken to
cool the property market
- Figure: The base rate was reduced to 0.5% in 2008 in an attempt to
reignite the economy
- Figure: The yields on 10-year Hong Kong government bonds reflect
confidence in the country' s financial market
- Figure: The Hong Kong exchanges are the third largest after Tokyo and
Shanghai
- Figure: Out of the 11 Asia Pacific countries, Hong Kong has the 10th
highest Gini coefficient
- Figure: Renminbi deposits have increased by almost 800% since 2009
- Figure: Hong Kong' s affluent individuals account for 28% of the total
population
- Figure: The mass affluent population is forecast to have recovered to its
2006 high by 2012
- Figure: The market for HNW wealth management will not recover to its 2007
high until 2012
- Figure: Hong Kong mass affluent individuals are forecast to recover to
pre-crisis levels by 2012
- Figure: HNW AUM will approach its 2007 high by the end of 2011
- Figure: The majority of non-REIT funds under management are sourced from
investors outside of Hong Kong
- Figure: Hong Kong has either ratified or pending double tax agreements
with 13 countries across Europe
- Figure: Hong Kong has either ratified or pending double tax agreements
with eight countries in the rest of the world
- Figure: Source of offshore AUM in Hong Kong
- Figure: The majority of Hong Kong HNW individuals are between 31 and 50
years old
- Figure: The proportion of male HNW individuals in Hong Kong is almost
equal to the regional average
- Figure: Hello Kitty VIP banking targets affluent female customers in Hong
Kong
- Figure: Hong Kong wealth is largely amassed through
business/entrepreneurship and earned income
- Figure: Hong Kong HNW investors focus their portfolios on equities and
fixed income
- Figure: Hong Kong HNW investors favor equities, corporate bonds, and
deposit savings
- Figure: Over the next two years, allocation into fixed income and cash or
near-cash products will increase
- Figure: Asset management, financial planning, and selected credit products
are readily available
- Figure: Asset management service availability is set to expand over the
next two years
- Figure: Advisory asset management is in very high demand in Hong Kong
- Figure: Advisory asset management will continue to be the most important
service for Hong Kong HNW individuals
- Figure: Hong Kong HNW individuals show high demand for margin lending and
mortgages
- Figure: Demand for inheritance and tax planning will increase over the
next two years
- Figure: Hong Kong HNW investors understand risk and return and have a high
risk appetite
- Figure: Wealth managers cannot rely upon online channels for client
communication
- Figure: Weekly phone and email updates are common in the Hong Kong wealth
management market
- Figure: Just over one-quarter of Hong Kong HNW investors allocate 71 - 90%
of their portfolio with one wealth manager
- Figure: Hong Kong HNW investors are inclined to rely on a recommendation
when choosing a wealth manager
- Figure: Existing client referrals are the most successful method of
acquiring new clients
- Figure: Client events are moderately successful in terms of acquiring new
clients
- Figure: Citi offers three wealth management propositions and a dedicated
offshore banking service
- Figure: CITIC Bank is jointly owned by BBVA and China CITIC Bank
Corporation
- Figure: CITIC Bank offers two wealth management propositions
- Figure: CITIC Private Banking Visa Platinum credit card provides improved
benefits compared to the CITICfirst offering
- Figure: The CITICfirst Visa Platinum credit card has extensive benefits
- Figure: DBS offers three wealth management propositions
- Figure: DBS Treasures offers credit cards with exclusive benefits and a
smartphone app
- Figure: Hang Seng offers two affluence defined wealth management
propositions
- Figure: The Julius Baer Cares Foundation was launched in 2008
- Figure: Global Wealth Managers Survey 2011 geographic coverage
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