Hong Kong courts ultra-rich Middle East families in wealth push
Hong Kong is zeroing in on rich Middle Eastern investors as it looks for new pools of capital to boost its status as a wealth-management hub.
Interest groups in the city have invited more and more guests from the Gulf’s ultra-wealthy clans and family-linked entities over the past two years at a pace unseen before the pandemic, according to about half a dozen observers interviewed by Bloomberg News. The move responds to a steady outflow of foreign investors, taking the shine off Hong Kong as the gateway to China.
Just last week, executives heading two of the biggest Abu Dhabi and Saudi Arabian philanthropies, both founded by members of the royal families, spoke at an event organised by the Hong Kong Jockey Club Charities Trust.
Hong Kong’s push has continued even after an embarrassing situation in March, when the credentials of a guest speaker at a government-sponsored summit, whose website claimed the ruler of Dubai was his uncle, were questioned.
The growing ties are parts of Hong Kong’s charm offensive to show that it’s open for international business. Money flowed out of the city when many of the super-rich left for Singapore and other locations during the draconian Covid-19 restrictions and sweeping crackdowns against political dissent. At the same time, Beijing is stepping up financial and investment links with the oil-rich region.
“Hong Kong is trying really hard to attract rich Gulf families,” said professor Gao Hao, director of Tsinghua University’s PBCSF Research Center for Global Family Business. “Those are the clans that dominate the economy and can exercise outsized influence.”
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For the Gulf investors, Hong Kong provides a fundraising platform for Middle Eastern businesses to expand and serves as a springboard to access the mainland Chinese market.
“China, Hong Kong and the Middle East are at an all-time high in terms of geopolitical relations,” said Patrick Tsang, the chief executive officer of the family office Tsangs Group, who alongside Jeffrey Kin-fung Lam, an adviser to Hong Kong’s government, last year founded the Ambassadors Club to boost the city’s status as a business hub. A spokesperson for Tsangs Group declined to share its assets under management.
VIPs and tourists
The number of Gulf VIPs in the city stood out last week.
Among them was Princess Nouf bint Muhammad bin Abdullah Al Saud, the chief executive officer of the Saudi Arabian non-profit the King Khalid Foundation, who was in the city for the first time in 15 years. Another visitor was Mohamed Haji AlKhoori, the director general of the Khalifa bin Zayed Al Nahyan Foundation, which was established in 2007 and is one of the biggest within the emirate of Abu Dhabi.
Both were speakers at a forum hosted by the Hong Kong Jockey Club Charities Trust, where the audience consisted of family offices and philanthropists from global heavyweights such as the Rockefeller Foundation and the Bill and Melinda Gates Foundation.
On the sidelines of the event, AlKhoori told Bloomberg News that the interaction between the Gulf and Hong Kong has accelerated in the past two years. When asked about his plans to travel to the city in the near future, he answered “soon, Inshallah” – or “God willing” in Arabic.
An Ambassadors Club event in Hong Kong last week featured five Gulf-based speakers including Yaser Al Yousuf, Abu Dhabi Investment Office’s director of investor relations, and Marwan Al Marri, the regional director for Asia at the Dubai Chambers.
The presence of the new arrivals is already making its mark in Hong Kong. Tsang and Lam said they are working with businesses in the city to increase the number of restaurants, food suppliers and hotels that are halal-certified. They also want to distribute halal kits to hotels, so they can serve guests even if their kitchens are not fully prepared. And Hong Kong held its first LIV Golf – the upstart competition backed by Saudi Arabia’s US$925 billion sovereign wealth fund – event earlier this year, and another is planned for 2025. Lam had dinner with golf legend and LIV chief executive officer Greg Norman last week.
Travel between the city and Saudi Arabia is also becoming easier. Hong Kong’s flagship carrier Cathay Pacific Airways is set to resume direct flights to Riyadh from Oct 28, while Emirates Airlines, backed by Dubai’s government, opened an immersive travel store in the heart of Hong Kong’s financial district in July, amid hopes that talks between the United Arab Emirates and China would pave the way for more flights.
Visitor arrivals to Hong Kong from Gulf states including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE increased 136 per cent in the year to July compared with the same period in 2023, with more than 16,000 people arriving, according to Hong Kong Immigration Department statistics.
Hub rescue
Hong Kong is placing an emphasis on becoming a global hub for family offices – and the Middle East is part of that plan.
There were more than 2,700 single-family offices in the city at the end of 2023, according to estimates in a government-commissioned study by Deloitte, with the majority from Chinese families. The government has introduced tax and residency incentives to attract more.
The more frequent arrival of Gulf visitors is set against a background of political moves. China President Xi Jinping visited Saudi Arabia in late 2022 and pledged to buy more oil and strengthen overall ties.
“The Middle East, of course, is an important partner for our country, and a key link in the Belt and Road Initiative,” Hong Kong’s chief executive John Lee said at last week’s Ambassadors Club event.
Due diligence
Hong Kong’s government department responsible for foreign direct investment has been facilitating introductions and partnerships between Middle Eastern investors and local businesses, said Jason Fong, the global head of the family office at InvestHK. The aim is “to attract investments from the Middle East, establish local businesses, and further strengthen Hong Kong’s position as a global investment hub”, he said.
Still, there have been bumps along the way. Earlier this year, Bloomberg News and other media outlets reported on a sheikh’s pledge to invest as much as US$500 million in a Hong Kong family office.
He spoke about philanthropy and wealth legacy on a panel during an invitation-only event with more than 400 guests and hosted by the city’s government. As media outlets started questioning his background, Sheikh Ali Rashed Ali Saeed Al Maktoum abruptly left the city, and the investment has yet to happen.
“Hong Kong will no doubt do more due diligence to prevent such incidents from happening again,” said Gao. BLOOMBERG
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