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Millionaires Mushroom In Hong Kong
by Mary Swire, Tax-News.com, Hong Kong
01 November 2007

Independent market analyst Datamonitor’s report, “Wealth Management in Hong Kong 2007”, forecasts that the number of dollar millionaires in the SAR is set to rise from 51,000 in 2006 to over 83,000 by 2011. The assets they hold will increase from USD$150 billion to almost USD$250 billion – an average annual increase of nearly 11%.

Featuring relatively low taxes, simple business regulations and flexible labour market rules, Hong Kong is ranked by the 2007 Index of Economic Freedom as the world’s most free economy. “It is Hong Kong’s open economy that has seen its financial services industry thrive. Competition in the industry is saturated with many of the world’s largest financial institutions operating there,” says Datamonitor Financial Services Analyst and author of the report David Lalich. “The nation is heavily dependent on its services industry which accounts for almost 90% of its GDP.”

Although Hong Kong has endured a series of adverse economic events over the past decade, with the Asian economic crisis over 1997-98, the global economic downturn during 2001-02 and the SARS outbreak in early 2003, since then it has produced strong GDP growth with local equity market capitalization expanding over 60% in 2006 alone.

Hong Kong has experienced an increase in both its number of individual millionaires and the value of their onshore assets. In 2006, there were over 50,000 wealthy individuals living in Hong Kong with USD$1 million (HKD$7.8 million) or more in onshore liquid assets, an increase from 31,000 wealthy individuals in 2002 representing 12.8% annual compound growth. Hong Kong millionaires held over USD$150 billion in onshore liquid assets in 2006, having increased at an annual compound growth rate of 14.8% since 2002.

Datamonitor predicts that Hong Kong’s wealth market will see strong growth over the next five years and expects it to grow at a faster rate than its major rival Singapore. “The number of millionaires in Hong Kong will increase at an annual compound rate of 8.8% over the next five years, to reach 83,000 by 2011. This group of wealthy individuals will hold aggregate onshore assets of around USD$250 billion by 2011, with their onshore liquid assets likely to increase by 8.9% annually over the period,” comments Mr. Lalich.

In contrast, the number of Singaporean millionaires is expected to increase 7.3% annually compounded between 2007-2011, while the onshore liquid assets they hold will increase 7.5% annually compounded.

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