HNW Offshore Investment: Booking Center Preferences 2016

  • ID: 3833705
  • Report
  • Region: Global
  • 43 Pages
  • GlobalData
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At a Global Level the US, Switzerland, Singapore, and the UK are the Most Important Booking Centers for HNW Offshore Wealth
Tax authorities worldwide have been cracking down on tax evaders, investors have reinvested their assets in their home countries. According to Global Offshore Investments Analytics, the top 10 deposit booking centers have seen their non-resident deposit holdings decline, albeit only marginally, over the past five years.

2015 was a weak year for the global offshore market. However, there have been clear winners and losers as the dynamics of the offshore markets continue to shift. The recent focus of most Western governments on tackling offshore tax evasion has affected certain traditional offshore centers more heavily, while the so-called mid-shores that combine on- and offshore traits have experienced strong fund inflows in recent years. The key centers for HNW individuals are the US, Singapore, Switzerland, the UK, India, Luxembourg, and Hong Kong, followed by more "traditional" centers such as the Isle of Man and Malta.

Critical success factors:
  • Know your customer - The propensity to hold assets offshore varies greatly by country. HNW individuals in the UAE, Russia, and Hong Kong hold more of their portfolios offshore than their counterparts in the US and Germany, for example. Understanding where these offshore investor pockets lie is a good starting point for customer targeting.
  • Not all offshore centers are equal - Understanding the USPs of each offshore center is key in determining their performance, future prospects, and the reasons why HNW investors will want to invest there. Centers such as the Bahamas and the Cayman Islands for example have traditionally promoted their low tax environments, whereas the success of the UK and the US has been due to their safe haven status.
  • Transparency is critical - Since the 2008 global financial crisis the scrutiny of offshore holdings and tax avoidance has intensified. As such the need for transparency and co-operation is critical as investors are turning away from traditional offshore hubs to avoid being tainted by association.
The report “HNW Offshore Investment: Booking Center Preferences 2016” insights to how to best promote your offshore proposition, helps to understand HNW investors’ booking center preferences and how this is expected to change and Learn how different offshore centers have performed in recent years and adjust your offshore proposition accordingly.
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1. Executive Summary
- Offshore market growth slowed in 2015
- Key findings
- Critical success factors

2. The Global Offshore Market in Context
- Offshore market growth has been slowing down
- The total size of the offshore market across the 10 largest offshore centers reached $56.7tn in 2015
- Non-resident deposit holdings have been muted
- Non-resident mutual fund holdings recorded a CAGR of 9.9% between 2011 and 2015
- 2015 was a weak year for non-resident equity holdings
- Non-resident bond holdings growth was also subdued in 2015
- Safe havens and the mid-shores are rising in prominence at the expense of traditional offshore destinations
- The largest offshore centers are OECD countries, not small tropical islands
- Pressure from Western governments is diminishing the importance of traditional offshore centers
- The so-called mid-shores have experienced strong fund inflows in recent years, but Singapore is slowing down
- The performance of traditional safe havens has varied greatly across asset classes
- Retail non-resident deposit holdings performed poorly in Europe in 2015

3. Booking Center Preferences OF HNW Individuals
- HNW individuals are an important part of the global offshore market
- HNW individuals across the world hold on average 22.7% of their wealth offshore
- The propensity for HNW offshore investment varies greatly by country
- At a global level, the US is the preferred booking center for HNW wealth
- The US, Switzerland, and Singapore are the most important offshore destinations for HNW individuals
- HNW booking center preferences vary significantly depending on nationality
- HNW individuals in the Americas make use of a range of booking centers for different reasons
- Expatriate flows are an important determinant for booking center preferences among US and Canadian HNW individuals
- Brazilian HNW individuals predominately invest in the US
- HNW investors in Asia Pacific are less geographically diversified than in the past
- HNW investors in Asia Pacific are increasingly considering wealth hubs close to home
- Southeast Asia tends to book much of its wealth in Singapore
- Australian HNW individuals make use of regional booking centers and the UK and the US
- Chinese HNW investors invest in safe havens
- European HNW individuals tend to invest close to home
- German HNW individuals invest predominantly in Switzerland and the UK, but this is about to change
- Shared borders and a common language are also important considerations among French HNW investors
- The Isle of Man is the preferred offshore destination among UK HNW investors
- Russian HNW individuals prefer well-established offshore centers, after suffering steep losses following Cyprus's bailout
- HNW individuals in the Middle East and Africa predominately invest in their country of origin, Switzerland, and the UK
- The UAE's sizable expat population maintains strong financial links with their countries of origin

4. Appendix
- Abbreviations and acronyms
- Supplementary data
- Definitions
- Affluent
- Double taxation convention (DTC)
- High net worth
- Liquid assets
- Mass affluent
- Investments
- Residency
- Exchange of information
- Tax Information Exchange Agreements
- Methodology
- Global Wealth Managers Survey
- Global Wealth Managers Survey

List of Tables

Table 1: Non-resident retail holdings in Switzerland, 2006?15
Table 2: Non-resident retail deposits and mutual funds in Hong Kong and Singapore, 2010?15
Table 3: Top 10 non-resident deposit holdings in the largest booking centers ($bn), 2010-15
Table 4: Top 10 non-resident bond holdings in the largest booking centers ($bn), 2010-15
Table 5: Top 10 non-resident mutual fund holdings in the largest booking centers ($bn), 2010-15
Table 6: Top 10 non-resident equity holdings in the largest booking centers ($bn), 2010-15

List of Figures

Figure 1: Offshore market growth slowed down in 2015
Figure 2: Non-resident deposits among the top 10 offshore centers have performed weakly over the past few years
Figure 3: Non-resident mutual funds have performed strongly in recent years
Figure 4: Non-resident equity holdings growth stagnated in 2015
Figure 5: Non-resident bond holdings rose by a mere 1.5% in 2015
Figure 6: The US attracts a large proportion of non-resident funds
Figure 7: Traditional offshore centers have struggled to perform
Figure 8: Non-resident deposits in the Bahamas have declined over the past two years
Figure 9: Wealth managers in Hong Kong and Singapore agree that funds are incoming due to the scrutiny that other traditional offshore centers have
Figure 10: The US remains the largest offshore market, but growth can be found in Japan
Figure 11: A bearish market performance saw US non-resident retail holdings contract
Figure 12: In 2015, non-resident deposit growth slowed in Europe
Figure 13: The tendency to allocate money offshore varies greatly among countries
Figure 14: The US is the preferred booking center for HNW wealth
Figure 15: Booking center preferences vary greater depending on HNW investors' backgrounds
Figure 16: US HNW individuals tend to book their wealth in their former country of residence
Figure 17: The economic bailout in 2013 hit Cyprus's offshore deposits market hard
Figure 18: Investec provides non-resident mortgages to South African HNW investors
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