In recent years, significant wealth has been migrating from Hong Kong to Singapore and, to a lesser extent, Switzerland. This trend is driven by concerns over Beijing’s tightening control over Hong Kong’s freedoms and autonomy. However, since early 2024, a surge of articles suggests a renewed preference for Hong Kong as a destination for family offices. This trend appears counterintuitive given the escalating encroachments on Hong Kong’s legislative and economic independence.Do not hesitate to contact us at [email protected] for more information.
This raises an important question: Would an Ultra High Net Worth Individual (UHNWI) entrust their fortune to a jurisdiction under the influence of the Communist Party of China? For Shanghai, the answer seems clear, and increasingly, the same applies to Hong Kong. Despite retaining some financial and tax autonomy, Hong Kong’s role as an autonomous entity for China is arguably diminishing. It is not far-fetched to imagine that within the next 15 years—or even sooner—Hong Kong might be fully integrated into mainland China.
Given this backdrop, it is crucial to assess whether Switzerland, Singapore, or Hong Kong offers the most stable and secure environment for High Net Worth Individuals (HNWIs) and UHNWIs considering establishing a family office.
Political and Legal Stability
- Switzerland: Extremely politically stable with a history of neutrality and democratic traditions. Its civil law system is robust, transparent, and adheres to the rule of law, providing strong asset protections, supported by banking privacy laws (though these have been relaxed under international pressure).
- Singapore: Politically stable with limited political pluralism, governed by a dominant party since independence. Its legal system is based on English common law, renowned for efficiency and low corruption, offering robust protections for assets and investments.
- Hong Kong: Historically politically stable with a legal system based on English common law, but recent interventions by Beijing raise concerns over judicial independence and asset security. Its increasing political and legal risks are impacting perceptions of stability.
Resilience During Global Crises
- Switzerland: A safe haven during global crises due to its diversified economy, neutrality, and robust financial sector. It is less vulnerable to environmental risks and maintains strong infrastructure for crisis management.
- Singapore: Highly resilient but more exposed to global trade and financial flow disruptions. Its advanced environmental management mitigates risks like rising sea levels, though vulnerabilities remain.
- Hong Kong: Historically strong financial infrastructure, but increasing political and economic instability reduce its crisis resilience. Rising sea levels and typhoons pose significant environmental risks.
Rankings (Scoring on a Scale of 10)
Political Stability and Legal System Stability
- Switzerland: Political stability (10), legal stability (9), asset protection (9), regulatory environment (9). Total: 37/40.
- Singapore: Political stability (9), legal stability (9), asset protection (9), regulatory environment (9). Total: 36/40.
- Hong Kong: Political stability (6), legal stability (7), asset protection (7), regulatory environment (7). Total: 27/40.
Resilience During Crises
- Switzerland: Economic crisis (9), political/geopolitical crisis (10), environmental crisis (9). Total: 37/40.
- Singapore: Economic crisis (8), political/geopolitical crisis (8), environmental crisis (7). Total: 31/40.
- Hong Kong: Economic crisis (7), political/geopolitical crisis (5), environmental crisis (6). Total: 24/40.
Interpretation of Rankings
- Switzerland: Scores highest, reflecting its neutrality, strong legal framework, and low environmental risks. It is perceived as the most stable and resilient location.
- Singapore: Close behind Switzerland, offering political and legal stability but slightly lower crisis resilience due to environmental vulnerabilities.
- Hong Kong: Despite being a global financial center, its decreasing autonomy and increasing political risks have significantly lowered its scores.
Conclusion
For UHNWIs considering where to establish or relocate their family offices, the decision should balance financial benefits with long-term security and political stability.
- Switzerland: The clear leader in stability and resilience, making it an ideal choice for those seeking long-term certainty.
- Singapore: A strong alternative, though slightly more exposed to global financial disturbances.
- Hong Kong: No longer a viable contender due to its diminishing autonomy and growing influence from mainland China.
For those prioritizing long-term wealth preservation and growth in a stable environment, Switzerland and Singapore remain the most favorable jurisdictions.
Our team of dedicated professionals, including lawyers, accountants, auditors, and bankers, is ready to assist you in setting up your Swiss Family Office. Do not hesitate to contact us at [email protected] for more information.
