Hong Kong’s affluent population is set to grow by an average annual growth rate of 3.3% between 2022 and 2026, driven by a continued expansion of the wealth market despite a challenging macroeconomic environment, according to a recent report.
Hong Kong continues to be an important financial hub of Asia-Pacific and is home to many of the region’s wealthy despite its tiny size, the report by data and analytics firm GlobalData reveals. Its affluent population accounted for 56.7% of the city state’s population at the end of 2021, highest compared with the rest of the region.
With a recovery in the Hong Kong economy following the Covid-19 pandemic, the affluent population – which includes mass affluent investors (those holding liquid assets of US$50,000 and US$1 million) and high-net-worth individuals (those with liquid assets of more than US$1 million) – is set to grow by an estimated 3.7% in 2022 following a 2.7% growth in 2021.
Hong Kong’s retail savings and investment market remained resilient and registered continued inflow of funds despite the difficult situation. It was able to register a growth of 8% in 2020 and 9% in 2021 in the value of its retail savings and investments market, thereby positioning itself as a favourable destination for global investors and wealth management companies.
The expansion of the market was mainly driven by a growth in mutual funds, leading to an increase in affluent population by 2.7% during the same period. Equities have been the greatest weakness for the territory in recent years, with a marginal decline of 0.6% in 2021, as investor sentiment deteriorated amid the resurgence of Covid-19 infections, mainland regulatory requirements, and uncertainty surrounding the global economic outlook.
“After witnessing two years of recession spurred by anti-government protests, Sino-US trade frictions, and the devastating impact of the pandemic, Hong Kong’s economy rebounded in 2021 with a gross domestic product growth of 6.4%,” says Ravi Sharma, GlobalData’s lead banking and payments analyst. “A revival in global economic activity and the territory’s central role in international trade and finance led to robust export performance and improved private consumption in 2021. This was also supported by government’s pandemic containment measures, supportive stimulus packages and vaccination programme.”
“Going forward, Hong Kong’s continued recovery from the pandemic and the mainland’s own transition away from a zero-Covid policy will lead to a revival in economic activity, and improved investor and consumer sentiment,” Sharma adds. “However, geopolitical situations like the ongoing Russia-Ukraine war continue to pose a challenge for faster growth in the coming years.”