Looking forward to the Year of the OxDate: 18/03/2021 Type: Articles Community Partner Topic: Private Client | Author: Sebastian Turner, Managing Director of Suntera Hong Kong
When you reflect on the Year of the Longtail, (I’m still Manx so can’t say R.A.T.), 2020, it could be the year that saved the HK private wealth market!
Though undoubtedly a year of disruption and upheaval, 2020 also brought about opportunities. When you look at Q3 2019, we were amid a period of political unrest that saw millions of people take to the streets and market commentators were highlighting the movement of wealth from Hong Kong to Singapore. I myself had noticed the transition of some peers attracted by the stable climate, more business opportunities and bigger apartments! Then towards the end of the year, we recorded our first case of COVID-19 and everything changed.
Having fallen victim to the SARS outbreak earlier in the decade, the Hong Kong people were quick to react. We imposed social distancing measures and made the wearing of PPE compulsory, which I think saved us from any mass outbreak or lengthy lockdowns that others have experienced. This has allowed the wheels of business to continue turning, even if at a slightly slower pace than normal.
Business development has completely changed in the face of the COVID-19 pandemic and our team have reacted fantastically. Where most people are hiding behind video calls/online meetings, we have been proactively seeking out socially distanced one-on-one meetings with our clients and business contacts outside the office environment - whether that be a coffee shop, the park or even one interesting socially distanced dog walk! In a culture that is so much about face and respect, people appreciate the effort, and our business development team are reporting a 23% increase on business enquiries compared to 2019.
One of the reasons for such an increase also has to do with the juvenility of the wealth in parts of South East Asia compared to our western counterparts. For many first and second generation UHNW families, the pandemic has made them realise that they do need to think about the future, not just the management of the assets now.
For the young entrepreneur, our short-form Trust offering has proved popular by providing a simplified structure in which the settlor can retain management over the underlying operating company whilst providing a suitable reporting framework for Suntera Global to meet the regulations and obligations placed on a Trustee. We have started to see these develop with cash, investments and property also being settled into the structure.
We also continue to see growth in our pre-IPO Trust offerings amongst our PRC-based clients as they seek to benefit from the broadening of the listing regime by the Hong Kong Stock Exchange (HKEX). This service offers risk mitigation for the owner of the pre-listed entity by providing:
- Ongoing security from events such as hostile bidders and activist shareholders
- Mitigation from adverse events such as divorce or death
- Shareholding remains concentrated even after death of the founder, compared to the unplanned scenario of dilution to several family members through the administration of the estate after death
- Family wealth and succession planning
- Potential tax mitigation depending on several factors
An addition to our Hong Kong service offering in 2020 was the acquisition of Suntera Corporate Services Limited, an Offshore Registrar agency business for companies listing on the HKEX. Having been in existence for over thirty years, the experienced staff manage over 40% of the offshore listed companies on the HKEX. We work closely with our colleagues in the Cayman office and with an agent in Bermuda who provide the Offshore Registrars, and in less than half a year, we have already seen this business start to grow.
Of course, there have been some stressful moments over the past twelve months, trying to keep our new office build on time and on budget during various social distancing measures was one that personally springs to mind. Plus like any company, we’ve had the issue of working from home but thankfully my colleagues have coped well, so the disruption was kept to a minimum and clients don’t seem to have noticed! The key takeaway from 2020 is that we must learn from these experiences, adapt ourselves for what will be an even harder year and understand that our traditional way of doing business has changed. I am confident that we can achieve this. Suntera Global has been very proactive in understanding our clients’ needs during this time and will continue to adapt as required.
Looking forward to the Year of the Ox, we are currently reviewing a consultation paper on proposed updates to the Hong Kong TCSP Ordinances, the first amendments to the ordinance since the licensing regime came into place in 2018. Our Business Development Director, Rose Chan, and her team continue to find unique and innovative ways to promote Suntera Global across Southeast Asia whilst our Client Service Managers Thanusha and Sam continue to look after our Private Wealth and Corporate Clients. Finally, as we were not able to hold an opening party at our new office last year, hopefully we will be able to celebrate with a one-year anniversary in September instead!
Something that 2020 taught us is that you can never know what lies ahead. So whatever the Year of the Ox brings, I hope you have a good year and from all the team at Suntera Hong Kong, we wish you good fortune in all of your endeavours.