Offshore money trickle gathers speed

Editorial | Mary Ma 15 Nov 2019

For the first time since 1997, the issue of choosing where to put ones' money has become so topical among Hongkongers that financial consultants are reporting an increase in enquiries about how to open offshore banking accounts.

But just because it is topical does not mean it is meaningful for everyone as it would normally require the applicants to speak directly to staff of overseas banks over the phone to complete the final step.

Some applications have been bogged down in the final stage.

Yet repeated assurances from the Hong Kong Monetary Authority that the administration will not impose capital controls seems to have failed to persuade people with money to save to stop taking the offshore precaution.

A young relative of mine, for example, recently changed his HK dollar deposits into US dollars despite advice that it would make no difference as long as the dollar peg remains valid.

In the end, it boils down to trust.

The question of "what if" is troubling many normal minds as the social unrest stretches into its sixth month and takes a broader toll on confidence.

Bloomberg reported this week that the SAR has slipped to the bottom of a list of 22 economic centers in relation to real estate investment prospects in respect of potential price increases in 2020.

Not surprisingly, Singapore has climbed to the No 1 position.

A major reason given for Singapore's rise points to increased demand in the office sector - meaning more companies are setting up offices in the city-state, which increases demand for residential properties as recruited talent moves in.

The emerging trend in Singapore - and other Asian nations like Vietnam, Malaysia and Thailand - has everything to do with the uncertainty stemming from the Sino-US trade war and over the future of the United States' Hong Kong Policy Act if the Hong Kong Human Rights and Democracy Act becomes law.

As for the companies, it's a process to contain their exposure to risks.

That Singapore is ranked No 1 for property investment in 2020 is a de-facto prediction that the trend will continue next year. It has always been the case that Singapore tends to benefit whenever Hong Kong suffers.

HKMA's monthly figures showed that HK$111 billion of Hong Kong dollar deposits were drawn in August, marking the largest monthly drop since May 2018.

Goldman Sachs estimated that over US$4 billion (HK$31.3 billion) flew from Hong Kong to Singapore over the past few months.

Those may be trickles, falling short of the academic definition that it would require an outflow of 5 percent of the money pooled in a place to merit the term "capital exodus."

The issue is that money is leaving, albeit in trickles.

By the same token, it's upsetting to note that whenever government officials describe the current recession, they qualify it with "technical" because the situation falls short of the definition of a recession as generally understood.

That's self-deception. When the next quarterly figures are published, it is bound to be another negative in view of the unprecedented turbulence since 1997.

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