Hong Kong’s affluent population is set to grow by an average annual growth rate (AAGR) of 3.3% between 2022 and 2026, driven by a continued expansion of the wealth market despite a challenging macroeconomic environment, says GlobalData, a leading data and analytics company.

GlobalData’s Wealth Market Analytics and Retail Investments Analytics reveal that Hong Kong continues to be an important financial hub of Asia-Pacific and is home to many of the region’s wealthy despite its tiny size. Its affluent population accounted for 56.7% of the city state’s population at the end of 2021, highest compared to the rest of the region.

With a recovery in the Hong Kong economy following the COVID-19 pandemic, the affluent population, which includes mass affluent investors (holding liquid assets of $50,000–$1m) and high-net-worth (HNW) individuals (holding liquid assets of more than $1m), is set to grow by an estimated 3.7% in 2022 following a 2.7% growth in 2021.

Ravi Sharma, Lead Banking and Payments Analyst comments: “After witnessing two years of recession spurred by anti-government protests, Sino-US trade frictions, and the devastating impact of the pandemic, Hong Kong’s economy rebounded in 2021 with a gross domestic product (GDP) growth of 6.4%. A revival in global economic activity and the special administrative region (SAR)’s central role in international trade and finance led to robust export performance and improved private consumption in 2021. This was also supported by government’s pandemic containment measures, supportive stimulus packages, and vaccination program.”

Hong Kong’s retail savings and investment market remained resilient and registered continued inflow of funds despite the difficult situation. It was able to register a growth of 8% in 2020 and 9% in 2021 in the value of its retail savings and investments market, thereby positioning itself as a favorable destination for global investors and wealth management companies.

The expansion of the market was mainly driven by a growth in mutual funds, leading to an increase in affluent population by 2.7% during the same period.  Equities have been the greatest weakness for the SAR in recent years, with a marginal decline of 0.6% in 2021, as investor sentiment deteriorated amid the resurgence of COVID-19 infections, mainland regulatory requirements, and uncertainty surrounding the global economic outlook.

Sharma concludes: “Going forward, Hong Kong’s continued recovery from the pandemic and the mainland’s own transition away from a zero COVID policy will lead to a revival in economic activity, and improved investor and consumer sentiment. However, geopolitical situations like the ongoing Russia-Ukraine war continue to pose a challenge for faster growth in the coming years.”