Around 2,000 exit ranks of the affluent

The number of Hongkongers with total net assets of at least HK$10 million was reduced by some 2,000 to 408,000, a survey by Citibank Hong Kong has found.

The affluent account for about 7 percent of the population and have a median net asset worth of HK$16 million.

Their wealth declined for a third year in a row, mainly due to the disappointing investment environment.

Citi made the estimates after interviewing 1,700 multimillionaires aged between 21 and 79 with at least HK$10 million worth of net assets and no less than HK$1 million worth of liquid assets, from October to December 2022 and from April to June 2023. They included over 200 children of the affluent class.

The survey found the median net assets, excluding liabilities such as property mortgages, shrank by 3 percent to HK$16 million as of June, and the median liquid assets, including stocks and bonds, fell 18 percent to HK$4.5 million within six months.

The more resilient assets were supported by properties, which contributed 72 percent, 5 percentage points higher than the end of last year.

Josephine Lee Kwai-chong, Citibank Hong Kong's head of retail bank, attributed the differences to a stronger real estate industry versus a sluggish stock market during the April to June period.

However, a weak investment environment has been seen in the past few years, as home prices lost 6 percent and the Hang Seng Index fell 31 percent from December 2020 to June 2023.

There were 515,000 multimillionaires in 2020, a peak since the survey started in 2013.

Though Lee cited the macro headwinds, the reduction of affluent Hongkongers came along the migration wave.

Despite fewer affluent people, Lee said the median of total net assets as of June actually increased from HK$15.5 million in 2020 and HK$15.7 million in 2021.

This year, 59 percent of those interviewed invested in mutual funds and 35 percent in bonds, with the proportion rising by 15 percentage points and 9 percentage points respectively in the first half. As for the upcoming policy address, Citi said there is a 70 percent chance the double stamp duty will be canceled to encourage residents to buy their second home.

Meanwhile, Citi holds a cautious outlook on Hong Kong's property market and anticipates the Federal Reserve to cut interest rates next year.

themis.qi@singtaonewscorp.com