Hong Kong's ultra rich starting to shy away from investing in Europe

Investment levels nosedived to 7.2%.

According to WealthInsight, although economic conditions in Europe are picking up, Hong Kong’s millionaires are opting to move their investments outside the old continent.

Hong Kong HNWI allocations to Europe decreased sharply compared to other regions, going from 11.7% in 2010 to 7.2% in 2014. WealthInsight expects millionaires to further reduce their level of investment in Europe over the next few years, to reach 4.9% of foreign HNWI assets by 2019. By contrast, the faith of Hong Kong millionaires in the Latin American and Africa markets increased over the last few years.

The Asia-Pacific region accounted for nearly 60% of Hong Kong HNWIs’ foreign assets in 2014, followed by North America with 17%, Latin America with 11.5%, Europe with 7.2%, Africa with 3.1% and the Middle East with 2.7%. According to WealthInsight, foreign asset holdings are expected to reach US$546.1 billion by 2019, accounting for 38.2% of the country’s total HNWI assets.

“Similar to China, HNWIs in Hong Kong prefer to keep their investments closer to home with nearly 60% of their foreign assets invested in Asia Pacific in 2014, largely in financial services sector. However, with a rather grim regional economic outlook as the Chinese’s economy continues to slowdown and the impact of Shanghai stock market crash is taking its toll widely than expected, local investors are now forced to ‘diversify’ and ‘select’ where they want to invest,” comments Dr Roselyn Lekdee, Economist at WealthInsight.

“Emerging markets such as Latin America and Africa have become more attractive due to larger profit margins in their investment opportunities, particularly in FMCG, infrastructure and impact investments.”

Hong Kong’s millionaire population is expected to grow strongly over the next five years, with figures forecasting a growth rate of 15.6%, to reach over 230,000 millionaires by 2019.

The number of billionaires in the country is also expected to increase. Between 2010 and 2014 the number of billionaires rose from 34 to 53 – a figure which is expected to increase by a further 11 in the next five years.