High-net worth individuals in Hong Kong are reportedly shifting their assets offshore in response to a government plan that would allow extraditions of criminal suspects to China. The bill will cover Hong Kong residents and foreign and Chinese nationals living in or traveling through the region.
Reuters spoke to financial advisers, bankers and lawyers familiar with the matter. The news agency reported that one tycoon, “who considers himself potentially politically exposed,” will move more than US$100 million from a local Citibank account to a Citibank in Singapore.
Hong Kong and Singapore vie with each other to be Asia’s top financial center; presently, Hong Kong has the edge with 853 residents worth more than US$100 million, just over double the number in Singapore, according to a 2018 report from Credit Suisse. That dominance could be undermined by the extradition plan, which caused mass protests that the South China Morning Post estimated at “nearly two million,” though the police number was much lower at 340,000. Taking to the streets of Hong Kong, the protestors demanded a public apology from Chief Executive Carrie Lam—as well as a letter of resignation.
A government statement was issued later that day saying, “The chief executive admitted that the deficiencies in the government’s work had led to substantial controversies and disputes in society, causing disappointment and grief among the people. She apologized to the people of Hong Kong for this and pledged to adopt a most sincere and humble attitude to accept criticisms and make improvements in serving the public.”
A government source said the bill would die a “natural death” without a firm schedule to reintroduce it. But if it were to become law, it would make it possible for Mainland Chinese courts to request Hong Kong courts to freeze and confiscate assets related to crimes committed on the mainland, beyond an existing provision covering the proceeds of drug offenses.
An international banker in Hong Kong, who spoke on condition of anonymity, told Reuters that his clients have been moving money out of Hong Kong to Singapore.
“These aren’t Mainland Chinese clients who might be politically exposed, but wealthy Hong Kong clients,” the banker said. “The situation in Hong Kong is out of control. They can’t believe that Carrie Lam or Beijing leaders are so stupid that they don’t realize the economic damage from this.”
Commercial lawyer Kevin Yam said the outcome is “great for Singapore,” and “such an own goal for Hong Kong.”
