A woman passes by the HSBC headquarters in Hong Kong. Escalating tensions in the Middle East drive growing capital inflows into Hong Kong as wealthy families and founders seek to diversify their global assets. CHEN YONGNUO / CHINA NEWS SERVICE
Investor jitters over the Gulf’s fragile security environment are prompting wealthy families and founders to weigh shifting capital to rival financial hubs, according to bankers and advisers.Anecdotal evidence suggested that high-net-worth individuals, or HNWIs, are already exploring moving their assets from the Middle East to other parts of Asia, with most of them preferring Singapore. The reassessment comes despite an interim ceasefire arrangement between Iran and the United States in June. Renewed attacks in the region cast the spotlight on the importance of diversification in wealth management, especially in “the period of geoeconomic stress”, experts said.Ian Yoong Kah Yin, a private equity investor and former investment banker in Malaysia, said that he has relatives and acquaintances based in the Middle East who returned to their home countries at the outset of the Iran war.“Many contacts in hedge funds, asset management companies and family offices are in the process of relocating to Hong Kong and Singapore. There is after all a lot of planning and execution involved,” Yoong said.Anthony Rollet, founder and CEO of Kane Capital Partners, a private equity real estate firm based in Indonesia, has seen high-net-worth families and family offices reassessing concentration risk and rebalancing capital owing to the escalating tensions in the Middle East.“The period of geoeconomic stress has highlighted the importance of optionality. Investors who have best navigated this are the ones diversifying across regions,” Rollet said. A month after the war erupted in the Middle East on Feb 28, data from the Monetary Authority of Singapore showed total deposits rose by S$66.2 billion ($51.6 billion), or 7.2 percent year on year, to S$2.1 trillion in March, accelerating from a 4.8 percent increase in February, according to a report in The Straits Times, a Singapore broadsheet.The Straits Times quoted Malaysia-based Maybank’s economists Chua Hak Bin and Brian Lee as saying these flows are reflected in an outsized jump in March for Singapore deposits, foreign currency deposits, deposits by non-residents, Monetary Authority of Singapore’s foreign reserves, and gold imports from Dubai.
