Investors across key markets in Asia – including China, Singapore, Hong Kong and Vietnam – are increasingly turning to international finance centres (IFCs) like the British Virgin Islands for the protection and risk mitigation of their assets, according to research commissioned by BVI Finance.
The research1, conducted by leading specialist business banking market research and analysis firm East & Partners, highlights the considerable percentage of large corporates, high net-worth individuals (HNWIs) and institutional investors already engaged with IFCs and the significant number who plan to do so in the near future.
Elise Donovan, Chief Executive Officer at BVI Finance, said: “In a world where managing and mitigating risks is of paramount importance it is clear that major groups and significant individuals in Asia plan to significantly increase their use of international finance centres, especially as the valuable role they can play in unlocking opportunities in a globalized world is recognized.
“The research shows that the British Virgin Islands (BVI) is often at the forefront of minds for these crucial segments. This is because of its reputation as an international investment and trade hub that adheres to all global standards, deploys leading-edge technology for clients and compliance and attracts and retains a dynamic and internationally minded talent pool. We are also top of the agenda for many Asian investors due to the market’s confidence in the BVI and the long-standing role we have played in the region’s growth over the last three decades. This is now all about how the BVI can help structure growth in the future and we look forward to further developing these relationships and partnerships in future.”
Paul Dowling, Principal Analyst at East & Partners added: “This research is significant as, for the first time, we have talked to the asset owners themselves and in large numbers. From those we interviewed, it is clear that safety, reliability, trust and confidence are critical factors that can be found via established international finance centres, such as the BVI, which have developed partnerships in Asia.”
More than a third of institutional investors already using IFCs
The use of IFCs is already commonplace in various Asian markets, with institutional investors leading the way with more than a third (36%) currently benefiting from engagement.
These investors cite risk management and international portfolio management as their main reason for using an IFC and see their biggest opportunities in the year ahead coming from emerging markets (47%) and China’s Belt and Road initiative (44%).
Existing engagement with IFCs by institutional investors is strongest in Hong Kong (64%) at present, followed by Singapore (47%), China (24%).
A fifth of large Asian corporates benefit from IFC usage and many more plan to engage further in the future
Among large corporates in Asia, 20% currently use IFCs and a further 36% actively plan to engage in the next 12 months.
The most common type of IFC entities that are being deployed by corporates are trust structures (65%) and business companies (55%) and this type of investor is expecting an average of 31% growth in their IFC business investments in the coming year.
The top four perceived strengths of IFCs among large corporates are multi-jurisdictional coverage (36%), a single administrative hub for offshore business assets (30%), regulatory consistency (20%) and the availability of experienced management within the IFC (20%).
Existing use of IFCs among large corporates in Asia is most common in Hong Kong (32%) and Singapore (28%). Future usage is forecast to grow the most in Singapore, with 48% of Singaporean corporates actively looking to use IFCs.
Almost half of Asian HNWI investable assets managed through IFCs
Wealthy individuals in Asia are alive to the possibilities afforded by IFCs, with 48% of investable assets currently managed through IFC entities.
Asset management and the ease of investing are among the key benefits cited, with use most prevalent in Hong Kong (53%), China (40%) and Singapore (30%).
Many HNWIs from these markets not currently using IFCs are planning to ramp up their involvement in the near future, with 35% from Hong Kong actively looking, followed by Singapore (32%), China (23%) and Vietnam (15%).
Elise Donovan, added: “The British Virgin Islands stands ready to support different types of investors throughout Asia as they plan their short and long-term future. With the current COVID-19 pandemic already having a major impact on the world and as countries emerge from the crisis, the need for dynamic economic activity will have never been greater and IFCs such as the BVI will be critical to its support and facilitation.”
The key findings for the three groups – HNWIs, large corporates and institutional investors – can be found below:
1East and Partners has conducted primary research over seven weeks through direct interviews with institutional investors, large corporates and high net worth individuals (HNWIs) based in China, Singapore, Hong Kong and Vietnam regarding their investment outlooks and use of international financial centres. Interviews ran for an average of +/- 40 minutes.
In total, there were:
• 200 interviews conducted with institutional investors (average AUM USD $12.5 billion)
• 401 interviews conducted with HNWIs (average investable wealth USD $10.2 million)
• 99 interviews conducted with large corporates (from top 100 revenue ranked)