Hong Kong residents rush for offshore accounts

An employee walks past an HSBC logo outside the bank’s headquarters in Hong Kong. (AFP)
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Updated 09 June 2020

Hong Kong residents rush for offshore accounts

  • Citizens worried about their currency’s future; banks say no noticeable capital outflows yet

HONG KONG: Banks including HSBC, Standard Chartered and Citigroup have seen a spike in enquiries from Hong Kong residents about opening offshore accounts amid concerns stemming from China’s decision to impose a national security law on the city, sources said.

HSBC and Standard Chartered have each seen a 25-30 percent jump in enquiries, they said. All five have direct knowledge about the rise in interest but did not want to be named as they were not authorized to speak to the media.

The queries add to concerns about capital flight from the Asian financial hub, which has been roiled by pro-democracy protests in the past year, and underline worries about the liquidity of assets as the new law inflames Sino-US tensions.

President Donald Trump has said he will strip Hong Kong of its special status under US law if China moves ahead with the law that aims to curb sedition, secession, terrorism and foreign interference.

“What I’m worried about the most is I might not be able to freely exchange Hong Kong dollar anymore if the US decided to sanction Hong Kong,” said 39-year-old May Chan, who recently asked HSBC about opening an offshore account.

The city’s de facto central bank has sought to allay concerns, saying it has all the means necessary to defend the Hong Kong dollar’s peg to the greenback.

None of the leading global retail banks with operations in the Chinese-ruled city have seen large outflow of deposits in the last two weeks, said two of the sources, noting it can take at least a month to open an offshore account.

But the rise in enquiries has been strong enough to slow banks’ response times, the sources said, adding places including Singapore, Britain, Sydney and Taiwan, are popular destinations.

Chan was told by HSBC she would have to wait a month just to get information about opening an offshore account.

She has already changed 70 percent of her savings into foreign currencies including the US dollar and British pound.

“If things get messy here I might not even be able to transfer my money out in the worst-case scenario, so it’s good to diversify risks.”

While authorities insist the legislation will target only a small number of “troublemakers,” critics say it could erode the high degree of autonomy of the former British colony.

Many Hong Kong residents are renewing their British National Overseas passport, after the proposed new law prompted Britain to offer a potential refuge to the almost 3 million eligible for it.

“Now is the second wave of opening offshore accounts; the first wave was after June last year during the protests,” said one of the sources, referring to the sometimes violent unrest against a now-withdrawn bill that would have allowed people to be extradited to the mainland.

HSBC declined to comment on offshore account enquiries, but a spokeswoman said the bank “had not seen any signs of significant outflows.”

A Standard Chartered spokeswoman said there had been enquiries about offshore accounts, but it had “not seen any noticeable capital outflows.”

A Citigroup spokesman said the bank had seen a pick up in local account openings as Hong Kong lifted coronavirus-related curbs, but it had not seen capital outflows or a rise in offshore account openings. 

Saudi Arabia’s 6-point plan to jumpstart global economy

Updated 07 July 2020

Saudi Arabia’s 6-point plan to jumpstart global economy

  • Policy recommendations to G20 aim to counter effects of pandemic

DUBAI: Saudi Arabia, in its capacity as president of the G20 group of nations, has unveiled a six-point business plan to jump start the global economy out of the recession brought on by the COVID-19 pandemic.

Yousef Al-Benyan, the chairman of the B20 business group within the G20, told a webinar from Riyadh that the response to the pandemic -— including the injection of $5 trillion into the global economy — had been “reassuring.”

But he warned that the leading economies of the world had to continue to work together to mitigate the effects of global lockdowns and to address the possibility of a “second wave” of the disease.

“Cooperation and collaboration between governments, global governance institutions and businesses is vital for an effective and timely resolution of this multi-dimensional contagion transcending borders,” Al-Benyan said.

“The B20 is strongly of the view there is no alternative to global cooperation, collaboration and consensus to tide over a multi-dimensional and systemic crisis,” he added.

The six-point plan, contained in a special report to the G20 leadership with input from 750 global business leaders, sets out a series of policy recommendations to counter the effects of the disease which threaten to spark the deepest economic recession in nearly a century.

The document advocates policies to build health resilience, safeguard human capital, and prevent financial instability.

It also promotes measures to free up global supply chains, revive productive economic sectors, and digitize the world economy “responsibly and inclusively.”

In a media question-and-answer session to launch the report, Al-Benyan said that among the top priorities for business leaders were the search for a vaccine against the virus that has killed more than half-a-million people around the world, and the need to reopen global trade routes slammed shut by economic lockdowns.

He said that the G20 response had been speedy and proactive, especially in comparison with the global financial crisis of 2009, but he said that more needed to be done, especially to face the possibility that the disease might surge again. “Now is not the time to celebrate,” he warned.

“Multilateral institutions and mechanisms must be positively leveraged by governments to serve their societies and must be enhanced wherever necessary during and after the pandemic,” he said, highlighting the role of the World Health Organization, the UN and the International Monetary Fund, which have come under attack from some world leaders during the pandemic.

Al-Benyan said that policy responses to the pandemic had been “designed according to each country’s requirements.”

Separately, the governor of the Saudi Arabian Monetary Authority said that it was “too early” to say if the Kingdom’s economy would experience a sharp “V-shape” recovery from pandemic recession.