China is forecast to suffer a net loss of around 10,000 US dollar millionaires, or roughly 1% of its high-net-worth individuals (HNWIs), in 2022, and Hong Kong is predicted to lose 3,000 more HNWIs than it attracts, according to a report that tracks private wealth and investment migration trends worldwide.
However, the number of Chinese US dollar millionaires and billionaires will grow by 60% over the next 10 years compared with just 20% in the US and 10% in France, Germany, Italy and the UK, notes the report published by investment advisory firm Henley & Partners. Russia is expected to increase its number of millionaires by 30% by 2031.
As expected, Russia has experienced the biggest exodus of millionaires over the past six months, with forecast net outflows of 15,000 by the end of 2022 – a massive 15% of its HNWI population and 9,500 more than in 2019, pre-pandemic.
The latest projected net inflows and outflows of US dollar millionaires (namely, the difference between the number of HNWIs who relocate to and the number who emigrate from a country) forecast by New World Wealth show that emerging and developed economies in Asia are rapidly catching up with traditional high-income markets when it comes to generating private wealth.
“General wealth growth in China has been slowing over the past few years,” says Andrew Amoils, head of research at New World Wealth. “As such, recent outflows of HNWIs may be more damaging than in the past.
“In particular, the banning of Huawei 5G in several major markets, such as Australia, the UK and USA, was a big setback for China. Huawei was the crown jewel of its hi-tech sector and may well have emerged as the world’s biggest tech company if not for the global interference. China’s deteriorating relationships with Australia and the US are also a major long-term concern.”
Investment migration demand spikes
There has been a marked rebound in the investment migration market in China and Hong Kong since the beginning of 2022, with a sharp pick-up in the number of enquiries from the East Asia region in Q1, the report points out. Around 57% were from China, followed by Hong Kong and Japan.
“After two years of pandemic, many European and Asian countries have been opening up and lifting Covid restrictions, but we have seen the opposite in China and Hong Kong,” shares Denise Ng, director of Henley & Partners Hong Kong and head of North Asia. “All of these developments, coupled with the war in Ukraine, have made many wealthy individuals in the region seriously consider the need to seek alternative residence and citizenship as a way to reduce the risks they are exposed to.
“There was an 18% increase in the number of web enquiries that we received in Q1 compared with the same period in 2021. Last year, enquiries were subdued due to the pandemic. But based on what we have seen in the first months of this year, we expect the number of enquiries in 2022 to be similar to 2019 – our peak year for enquiries in North Asia.”
Hong Kong’s net loss of millionaires for 2022 is “probably linked to the recent Hong Kong protests, which have almost certainly damaged its long-term appeal”, Amoils adds. “Notwithstanding this, Hong Kong remains one of Asia’s wealthiest cities with over 140,000 resident HNWIs.”