BL Magazine - Asia Edition 2020 by BL Magazine

GLOBAL BUSINESS: A VIEW FROM THE CHANNEL ISLANDS

BUSINESSLIFE

Bright futures ASIA EDITION 2020

How the Channel Islands and Asia are growing together

ASIA EDITION 2020

• Next gen wealth • Fintech • Family wealth • Green investment

Xxxxx

在一个充满变化的世界里, 你需要一个值得信赖的伙伴。鼓舞人心独立信任

25年来，我们的客户和他们的顾问们都欣赏这些品质，使我们能够建立长久的关系，成为他们值得信赖的伙伴。作为一个独立的金融服务企业，我们不采用“一刀切”的方法。我们致力于提供客户所需的定制解决方案，确保他们的个人或商业利益得到保障。让我们一起保护和增长你的财富。

Hui Zhao 私人客戶主管 Head of Private Client +44 7829 850 527 hui.zhao@fiduchi.com

In a world full of change, you need a trusted partner. Inspiring. Independent. Trusted.

For over 25 years, our clients and their advisors have appreciated these qualities, enabling us to build long-lasting relationships and become their trusted partner. As an independent financial services business, we don’t apply a ‘one size fits all’ methodology. We strive on our flexibility to deliver bespoke solutions that our clients require, ensuring their interests, whether personal or business, are safeguarded.

Together, let’s preserve and grow your wealth.

Heidi Thompson 執行董事 - 私人客戶 Executive Director +44 7700 349 750 heidi.thompson@fiduchi.com

私人客户 PRIVATE CLIENT 企业 CORPORATE 雇员 EMPLOYEE 基金 FUNDS 游艇 YACHTS

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Welcome

Serving the super-rich WELCOME TO THIS special Asia edition of Businesslife. There can be no disputing the prominence of the Asia-Pacific region when it comes to wealth. As of July 2020, the region accounted for the highest number of ultra-high-net-worth individuals in the world – with 831 super-rich wealth holders residing there. That’s 38% of the world’s super-rich, and means billionaire wealth in the region now totals $3.3trn, according to UBS’s Billionaires Insights Report 2020. To put this into context, there are 762 (35%) super-rich wealth holders residing across the Americas, and 596 (27%) in Europe, the Middle East and Africa. Asia-Pacific has retained its global position as “the engine of wealth growth”, according to UBS Global Wealth Management’s Anurag Mahesh, speaking at the report’s launch. Mainland China is the region’s top market for wealth creation, with 415 billionaires, followed by India (114), Hong Kong (65), Taiwan (40) and Australia (39). Of course, with a growing wealth population comes increased demand for complex, trusted and flexible financial products, services and tools – to meet the increasingly complex needs of these wealth holders. And in a world where investors are more mobile than ever before, that may well mean acquiring those services from within other jurisdictions.

PERFECT PARTNERS With this in mind, this special edition of Businesslife explores in detail the growing relationship between Asia-Pacific and the Channel Islands. One area that epitomises the relationship between the jurisdictions is the trend of wealthy Far East families and entrepreneurs turning to the Channel Islands to set up trusts and protect their assets, an issue we explore in our feature starting on page 38. Our article reveals that, despite the huge geographical differences between Asia and the Channel Islands, there are fundamental similarities between their jurisdictional trust structures. But there are enough key differences to ensure that Asian clients are increasingly taking advantage of the Channel Islands for asset protection. “Asian clients are beginning to understand that Jersey trust law in particular is very robust and flexible. Indeed, the whole regulatory regime and financial services

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sector is more stable and more mature than jurisdictions such as Singapore. It is tried and tested and has an excellent reputation,” one expert based in the region tells us. “[Their decision] is not just based on location and convenience anymore. It is more of a holistic solution.” A further cause of the strengthening relationship between Asia-Pacific and the Channel Islands is the wall of Asian capital currently focused on European assets, as we explore in our feature on page 44. South East Asian investors, from pension funds to HNWIs, are more keen than ever to steer their capital to the West, our article finds. These investors’ interest in Europe, and particularly the UK, has been well documented in recent years. The London skyline is evidence of that – iconic developments ranging from the socalled Walkie Talkie (£1.28bn) and Cheesegrater (£1.15bn) buildings, as well as the multi-purpose development at Battersea Power Station (£8bn), are all now in the hands of Malaysian and Hong Kong purchasers. However, diversification is fuelling further activity. Diversification is evident in terms of investors now coming from a wider range of Asia-Pacific countries – from Singapore, Taiwan and Korea, for example. Korean investment rose 122% year-on-year in 2019, to €12.5bn. But diversification is also taking place in terms of the types of investment in demand. “In years gone by, trophy assets seemed to be the main prize of the Asian investor. You are now more likely to find Asian purchasers looking at logistics assets in Dunfermline in Scotland, or student housing in Birmingham,” one specialist explains. Of course, another good barometer of economic and financial growth in a region is the development of its fintech sector. As our feature starting on page 48 explains, from large corporates looking to drive innovation, to emerging markets seeking ways to serve the underbanked, there is plenty of growth among Asian fintech developers. It’s likely their activities will further create products and services to meet the needs of the growing wealth sector in the region. But it’s unlikely that this alone will be enough – which means cross-jurisdictional relationships can be expected to continue to develop and thrive as we move forward. Enjoy the issue. n

Despite huge geographical differences between Asia and the Channel Islands, there are fundamental similarities between trust structures

Jon Watkins is Editor-in-Chief of Businesslife

asia edition 2020 3

Contents

INSIDE

BUSINESSLIFE

Businesslife is published quarterly by Chameleon Group, with special editions covering the City and Middle East and Asia +44 7377 866779 www.blglobal.co.uk

CEO, CHAMELEON GROUP Carl Methven carl.methven@blglobal.co.uk EDITOR-IN-CHIEF Jon Watkins ART DIRECTOR Angela Lyons SUB EDITOR Kate Wheal ADVERTISING sales@blglobal.co.uk NEWS AND EDITORIAL news@blglobal.co.uk GENERAL ENQUIRIES enquiries@blglobal.co.uk

JACQUELINE SHEK Executive Director, Trust Services, Zedra

Why the city state continues to be a key gateway for global opportunity

ong Kong plays a leading role as a global finance and business centre and is set to continue to do so, with business booming among high-net-worth and ultra-high-networth Chinese families seeking sophisticated wealth-planning solutions. In September, Hong Kong has once again regained its position ahead of Singapore, ranking fifth among 111 centres in the Global Financial Centres Index report from London-based thinktank Z/Yen Partners and the China Development Institute. The city was among the top five centres in terms of the business environment, human capital, infrastructure, financial sector development and reputation, and it was first in terms of trading, according to the report. Strong growth throughout Asia, but particularly in Hong Kong, is our experience, too. In many ways, global and local political instabilities, as well as the pandemic, have acted as something of a supercharger for business in the region, catapulting business enquiries around areas such as pre-immigration planning, succession planning, trusts and other asset protection structures to manage wealth for future generations. Ironically, it is when people feel threatened that they are more likely to look to establish or review their existing succession plans. For businesses, that creates a chance to bring together corporate, fund and private wealth services to service the growing number of very wealthy Chinese billionaire entrepreneurs and their family offices. China is the engine room for this growth. The country continues to grow and to be a success story. The Hurun China Rich List, widely recognised as the foremost authority on tracking the rapid changes among China’s

high-net-worth population, recorded more wealth created in 2020 than the previous five years combined. This signals that the structure of the economy has evolved, moving away from traditional sectors such as manufacturing and real estate towards the new economy. The report’s findings are echoed by UBS and PwC’s 2020 Billionaire Insights Report, which shows that despite the pandemic, the total number of Chinese billionaires increased to a new record of 415 – with a total wealth of $1,680.9bn – at the end of July 2020. A consequential pattern that has emerged over the past 18 months is an increase in demand for family office services from successful Asian family entrepreneurs. Asian markets offer enormous prospects for growth. Asian businessmen and businesswomen have very specific needs and increasingly prefer a global wealth management solution. Typical clients are likely to be multi-banked and seek an open architecture platform, which will enable them to select specific expert advisers, according to their exact requirements. They also need a level of cultural understanding and linguistic competence to deliver global best practices. All this means a successful, sophisticated financial services operation in Hong Kong must have functional specialists who are native speakers and, more importantly, can adapt to the pace and way things are now done. A new generation of confident, successful Chinese, Hong Kong and South East Asian entrepreneurs are setting the bar ever higher. Personal income taxes in China can rise to 45% and, as clients invest globally in all classes of assets, tax planning expertise is always critically important. However, other factors also come into play. The ultra-high-net-worth individuals and their families that we work with often have global business interests or family members in different jurisdictions. For them, family governance, wealth protection, succession planning and access to global jurisdictions are central to any discussion too. When it comes to serving the needs of successful Chinese families, our business partners look to Hong Kong or Singapore in order to provide the necessary expertise to deliver appropriate offshore trust and family office solutions. The growing trend in the demand for family trusts and family office solutions will last for some time to come. Hong Kong continues to be a gateway for the world into China, but equally, the gateway for mainland Chinese to access global opportunities and solutions in the wealth management industry. n

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Image credit: Zuhairi Ahmad / Shutterstock.com

CO MME N T

Hong Kong’s booming HNW appeal

asia edition 2020 17

17 COMMENT

10 News

32 global investment

40 trusts law

Recent Channel Islands business news

Asian family wealth crosses many borders, so how can Channel Islands specialists rise to the challenge?

Asset-rich Asian families and entrepreneurs are increasingly turning to the Channel Islands to protect their assets

36 hong kong

44 investment trends

Political upheaval hasn’t unsettled the territory’s key role in wealth planning for Chinese families

With South East Asian investors as keen as ever to send their capital to the West, what does that mean for the Channels Islands?

12 hong kong funds A sustainable investment link-up between Hong Kong and Guernsey is setting new global standards

18 singapore Why Singapore continues to offer plenty of opportunity – rather than rivalry – for the Channel Islands

48 fintech Will strict governments and regulators stifle the opportunity instinct of ambitious Asian fintech developers?

24 wealth management Advisers need to up their game if they are to meet the needs of Asia’s new generation of wealth holders

Zedra’s Jaqueline Shek on why Hong Kong continues to be a boom town for high-net-worth opportunity

The knowledge Asia’s economy in numbers, how to be a modern expat, Masayoshi Son in focus, and an insight into the world of chip manufacturing

contributors The BL Global Discussion Forum

Follow us @blglobalnews Office: 7 Castle Street, St Helier, Jersey, JE2 3BT © Chameleon Group Limited, all rights reserved. Reproduction in whole or in part without written permission is prohibited. Views expressed by our contributors are their own and do not necessarily represent the views or policies of Chameleon Group. While every effort is made to achieve total accuracy, Chameleon Group cannot be held responsible for any errors or omissions.

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ALEXANDER GARRETT

Sustainable investment continues to be the hot finance topic – Alex finds a Hong Kong/Guernsey tie-up is setting the pace for meaningful partnerships around the world.

JAMES TALL

James looks at opportunities for Asian fintech developers to capitalise on growing demand for digital solutions, and a need to serve the underbanked, despite strict regulatory monitoring.

SOPHIE MCCARTHY

Sophie looks at how the tendency for Asian family wealth to traverse multiple countries affects the Channel Islands – and what specialist support is required on the islands to manage that wealth.

DAVID CRAIK

Meanwhile, on a related note, David examines why so many wealthy Far East families and entrepreneurs are turning to the Channel Islands to help them set up trusts and protect their assets.

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About Businesslife

FROM THE CHAN ESS: A VIEW GLOBAL BUSIN

GLOBAL BUSINESS: A VIEW FROM THE CHANNEL ISLANDS

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them. As a result, we are always keen to hear from businesses and business leaders about the things they are focused on and their success stories. You can do that by contacting our editor directly. Businesslife also supports a great number of businesses in raising their profile among their customer base through a host of advertising and commercial opportunities, ranging from full-page print and digital banner advertising, to advertorial content, directory listings and more. Whether you are new to Businesslife or a regular reader of our publication, we hope you enjoy this special issue exploring the relationship between the Channel Islands and Asia, as well as the opportunities in each region. n

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ISLANDS

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The Funds Edition 2019 • Start-up funds • Private equity • Climate change benchmarks • Alternatives • Private capital • Specialist funds

ISSUE 65 NOVEMBER 2019 -JANUARY 2020

Channel-Islands based business and lifestyle magazine distributed widely across Jersey, Guernsey and London. Through our four regular themed issues each year, we explore major global issues and emerging trends across financial services, as well as wider business topics – looking at wealth, the future of financial services, the funds sector and digitalisation. In doing so, we pull together the thoughts, vision, intellect and excellence of business professionals locally, acting as a forum to send that message globally. Since we launched in 2009, however, we have expanded far beyond our regular issues. We now also run three ‘special editions’ every year, focused on the Channel Islands’ relationship with three of the most important jurisdictions in the world: the City of London, the Middle East and Asia – our focus for this special edition. Our regular quarterly issues see more than 10,000 copies distributed through major airports, Waitrose supermarkets and business reception areas across Jersey and Guernsey – as well as London airports and offices. Our special issues, including this Asia Edition, are also distributed directly into those regions through corporate offices, hotels and airports. Running alongside the magazine is the www.blglobal.co.uk website, which not only acts as an archive for all print copy, but is recognised as being the most up-todate online resource for Channel Islands business news – as well as covering the global issues important to Channel Islands businesses and financial services players. With our commitment to helping businesses size up opportunities, share ideas and grow, we are dedicated to exploring the topics and issues that are important to

CITY EDITION

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• Green fund • UK real esta s • Gender equa te lity • The Hong Kong dilemma • Business travel

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• family wealth • fintech • esports • real estate • crowdfunding

ISSUE 69 AUGUST/SEPTEMBER 2020

For readers coming new to Businesslife with this special Asia edition, here’s an insight into the publication and our community

BUSINESSLIFE

Welcome to Businesslife

AUGUST/SEPTEMBER 2020

Time to change

The funds sector shapes up for a more ethical era of investing

we are committed to helping businesses size up opportunities, share ideas and grow

FIND OUT MORE Contact the editor To share ideas for Businesslife, contact Editor-in-Chief Jon Watkins directly at jon.watkins@blglobal.couk or by calling 07766 011998

Commercial opportunities With a host of advertising packages available for 2021, Businesslife is also offering discounted rates for advertisers who take up options during January. If you are interested in exploring commercial opportunities in Businesslife throughout 2021, would like a copy of the 2021 Media Pack or details on discounts for early bookings, please contact Carl Methven on 07797 796377 or email carl.methven@blglobal.co.uk

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BL BY NUMBERS

“While Singapore has moved into the trust space over the last 10-20 years, the courts in Singapore are not particularly familiar with trusts, and especially with trusts in dispute”

$5TRN

Value of Asian wealth set to be transitioned to the second and younger generations

$15TRN

THE LEVEL OF ESTIMATED INVESTMENT REQUIRED OVER THE NEXT THREE DECADES FOR CHINA TO MEET ITS NET-ZERO TARGET

SUSTAINABLE FUNDS, PAGE 12

Amount by which Asia’s population of high-net-worth individuals increased last year

ASIA’S WEALTH TRANSFER, PAGE 24

$63.8TRN Total Chinese household wealth in 2019

“Families are drawn to the Channel Islands, which have built up a reputation as centres of excellence for these sorts of structures”

Paul Hodgson, Butterfield Bank’s Deputy Group Head of Trust, on the Channel Islands’ opportunity to support Singapore

Sarajane Kempster, Director, Fiduciary Specialist Team, RBC Wealth Management

PAGE 18

ASIA’S FAMILY SHIFT, PAGE 34

“Hong Kong is still very much China’s route in and out for both Chinese people doing business abroad and foreign companies looking to move into China” James Russell, Managing Director, Equiom, Asia, on Hong Kong’s continued appeal

PAGE 36 www.blglobal.co.uk

“There is a lot of young money with very wealthy entrepreneurs in their 30s and 40s… They want to keep control of their assets and not just have the power of investments” Nancy Chien, Partner, Bedell Cristin, on trust law

PAGE 40

$30M Amount recently invested by Sumitomo Mitsui Banking Corporation in UK challenger bank OakNorth

THE RISE OF ASIAN FINTECH, PAGE 48 asia edition 2020 7

Introduction

brighter in the east The numbers behind Asia’s growing wealth population and its increased focus on investment opportunities in Europe and the UK show the scale of opportunity for Channel Islands businesses

Words: Jon Watkins VAST IN SIZE, under-serviced when it comes to many financial products, and with a rapidly growing wealth demographic, Asia has long held the gaze of Channel Islands financial services players. The numbers are eye-watering. Asia’s population of high-net-worth individuals increased by 8% last year alone. It’s predicted Asia will be home to one-third of the world’s billionaires by 2023. And $5trn of estimated wealth transition is about to take place as wealth moves to the next generation. Asia is the home of the super-rich. Yet, amid that huge transfer, few wealthy families have in place organised succession planning. Many feel the wealth sector lacks organisation, and fewer than 5% of the wealth community believe Asia’s wealth industry is prepared for the upcoming transitions. Furthermore, Asia, vast as it is, continues to spring new financial hubs offering further opportunities for financial players with experience and well-established offerings. Singapore continues to rise, as does Hong Kong, despite its recent unrest. It’s no wonder the Channel Islands – built on stability, deep expertise and flexibility – are eyeing opportunity in the East. Of course, ever-increasing investment into Europe by Asian investors, coupled with

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readily available lending in support of those investments, is further heightening the interests of Channel Islands players. As a recent industry update from global legal and professional services firm Walkers pointed out, there are multiple drivers for Asian wealth-holders’ interest in Europe. But three in particular are fuelling activity right now: • Difficulty for investors in finding valuable investments in a mature Asian market, creating a desire to diversify • A weak pound • Investment opportunities in UK assets, particularly outside London, in regional hubs where there are potentially greater yields, sizeable investments, regeneration opportunities and notable developments in infrastructure. The HS2 railway project, which will link London, the Midlands and the North, is a key example. Walkers’ analysis also suggests the emergence of Covid-19 is further adding fire to Asian investors’ interest in the UK and Europe, particularly in the property markets. Its report says: “In the London commercial property market, discounted real estate valuations arising from a combination of Brexit and the Covid-19 pandemic are being reported. “Investors are also making use of Channel Islands protected cell companies and structures through which they are able to make Shariacompliant investments into Europe.” All of this is creating increased demand for Channel Islands expertise when it comes

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Introduction to structures and trusts. Asian clients are gaining a greater understanding that Jersey trust law in particular is robust and flexible. Indeed, the whole regulatory regime and financial services sector are more stable and more mature than many Asian jurisdictions, such as Singapore. As we explore in detail elsewhere in this issue, reserved power trusts are proving particularly popular. This is driven by young wealth holders and wealthy entrepreneurs in their 30s and 40s looking to keep control of their assets – not just having the power of investments but also appointing beneficiaries or varying the trust deeds. They are also looking for more and better guidance on long-term family asset protection and, for many, the Channel Islands meet this requirement. It’s clear that the opportunity to service a growing, yet under-serviced, wealth generation in Asia – together with Asian investors looking towards Europe and the UK in search of opportunities – is creating plenty of opportunity for Channel Islands financial services players. And the numbers here and in this issue demonstrate exactly why. n

Asian wealth by numbers

Rise in population of high-net-worth individuals in Asia in 2020

17-fold

Increase in Asian wealth between 2001 and the end of 2019, when total Chinese household wealth reached…

$63.8trn $5trn

Value of Asian wealth set to be transitioned to the second and younger generations

70%

Proportion of Asia’s wealth community who say private clients in Asia are more willing than ever to professionalise their legacy and succession planning

Proportion of Asia’s wealth community who believe the region’s wealth industry is prepared for the upcoming wealth transitions

87%

Proportion of Asia’s wealth community who believe digital technologies and connectivity from banks and wealth management firms will be important or crucial to the second and third generations

$66bn

Value of green bonds expected to be issued by Hong Kong’s government over the next five years

90% www.blglobal.co.uk

Proportion of Asian HNW investors who say they are interested in sustainable investments and plan to invest between 5% and 10% in this area

asia edition 2020 9

in the NEWS HSBC SUSTAINABLE FINANCE SURVEY Capital market issuers in Europe are attaching greater importance to sustainable finance than a year ago and Jersey and Guernsey can play a key part in supporting that trend. So says the recently published Sustainable Financing and Investing Survey 2020 from HSBC, which found that the Covid-19 pandemic has strengthened belief in sustainability for 36% of European issuers. More than three-quarters (77%) also said the pandemic has either reinforced their commitment to environment, social and governance (ESG) or made them realise they had paid too little attention to the social component of ESG. European issuers are now the most committed in the world to environmental and social issues – 95% said these issues are ‘very important’ (76%) or ‘somewhat important’ (19%), compared with 93% globally. And European investors lead the way in avoiding negative impacts on the environment and society – 61% of those surveyed cited this, compared with 53% globally. Aline Ayotte (pictured), Head of Commercial Banking at HSBC Channel Islands and Isle of Man, said: “Guernsey and Jersey have established themselves as leading players in the cross-border investment funds space. With Europe at the forefront of international efforts to fight climate change, the islands have a significant opportunity to support issuers and investors in the transition to a net zero global economy.”

cyber risks to raise awareness and manage the potential impact on the business. Le Roux said: “I understand the trials and tribulations that go along with being responsible for managing risk within the constraints of a company, and feeling overwhelmed by the number of tools needed to safeguard the business. We want to guide people rather than just sell solutions and software.” JERSEY NAMED TOP IFC IN MENA AWARDS Jersey has been named Best International Finance Centre at the recent WealthBriefing MENA Awards in Dubai. The awards are designed to recognise companies, teams and individuals deemed to have demonstrated innovation and excellence during 2019. The judges commented: “Jersey Finance is focused on differentiating through a comprehensive outreach programme that saw its first full year as the first IFC to establish a presence in the Dubai International Finance Centre. “Our judges were impressed by their detailed submission, which listed areas of excellence and how it is leading the way in terms of international compliance and regulatory cooperation.” Joe Moynihan, Chief Executive Officer of Jersey Finance, commented: “Jersey has a strong and solid relationship with the Gulf Region and we are proud it has been recognised as their leading IFC. It is testament to the hard work our industry has put in throughout the year and Jersey’s longstanding ability to offer a stable, well-regulated environment.”

JERSEY FOCUSES ON SOUTH AFRICA The choice of domiciliation can make or break a fund’s success and, as attitudes and practical conditions in the business environment change, there are still GUERNSEY CYBER RISK LAUNCH enormous opportunities for driving CentricalCyber has been launched in capital in Africa. Guernsey to help business leaders better These were among the findings understand and manage cyber risk. of a report commissioned by Jersey The business has been set up by former Finance, entitled South African Fund Investec Bank Chief Operating Officer Managers: Trends in Fund Domiciliation and Chief Risk Officer Rudi Le Roux, and Capital Raising. African Business along with business consultant Kyan magazine surveyed more than 60 topFrith. Working with C-suite leaders, level executives, investors (LPs) and fund IT professionals and board members, managers (GPs) operating in jurisdictions CentricalCyber analyses a business’s main worldwide with a connection to South

10 ASIA EDITION 2020

Done Deals Ogier has advised PizzaExpress group on its restructuring plan, the second to be launched following the introduction of the restructuring plan procedure under the UK Companies Act 2006 in June. Ogier worked alongside Kirkland & Ellis to advise PizzaExpress across all aspects of the transaction – structuring, regulatory matters and the restructured financing arrangements, including TISE listing issues. Partner Bruce MacNeil (pictured) led the Ogier team. Carey Olsen’s corporate team in Guernsey has advised VinaCapital Investment Management on the migration of the investment manager’s licence and registration to Guernsey – the first such inbound migration to use the Guernsey Financial Services Commission’s fast-track application regime for managers of overseas funds, introduced in July 2020. Established in 2003, VinaCapital is a Vietnamese investment management and real estate development firm, with a diversified portfolio of $3bn in assets under management. The Carey Olsen team advising VinaCapital on all Guernsey aspects of its migration was led by Corporate Partner Ben Morgan. BDO in Guernsey has acted for the Channel Islands Media Group (CIMG) in its strategic acquisition of creative digital agency TPA Guernsey. A BDO advisory team led by Executive Director Stuart Phillips and Business Advisory Director Steve Desmond carried out financial due diligence on the TPA Group. TPA will continue to operate independently, offering creative, marketing and digital services to clients across the Channel Islands and abroad. Its focus will be on its Jersey operation and leading the transformation of the digital offering of the Guernsey Press. n

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MERGERS AND ACQUISITIONS Brooks Macdonald International, the Channel Islands-based subsidiary of the Brooks Macdonald Group, has completed its acquisition of the wealth management and funds business of Lloyds Bank International. The acquisition will increase its funds under management in the Channel Islands by more than 50%. It will also add a discretionary client base and a multi-asset and fixed income fund range to the firm’s offering, as well as enhanced intermediary distribution capabilities.

South Africa image: Rich T Photo / Shutterstock.com

Jersey-based HLG Associates and Guernsey’s Lindum Consult are merging to create a pan-Channel Islands provider of quantity surveying, project management, environmental, health and safety and construction advisory services. HLG will now trade in Guernsey as Lindum. Specialising in advisory services to public and private sectors, HLG has worked with a wide range of Jersey and UK-based clients since 2010. Lindum has provided quantity surveyor and construction consultancy services in Guernsey since 2009. Founder Andrew Morley will continue as Managing Director in Guernsey. He will be supported by HLG Director Jerry Willis, who takes on the role of Director for the company’s Guernsey-based arm. Channel Islands financial software firms Fusion Systems and Acusoft have merged to become Fusion Acusoft. The Guernseybased business will focus on financial services software development. Although the merged business still has a core Channel Islands client base, it now serves more than 150 client organisations in 20 jurisdictions. The business plans to introduce new technologies and updated products in the coming months. Fusion Acusoft Managing Director Alan Rowe, who has led Fusion for 25 years, is joined by Gary Munro as a Director. n

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African managers. The aim was to explore emerging global trends in fund domiciliation and capital raising, particularly as a route for private equity impact investing in the wider continent. The research found that in a rapidly evolving global market, the choice of fund domiciliation has become increasingly salient for investors and fund managers. The choice of jurisdiction is being led by LPs, with the quality of a jurisdiction’s legal and regulatory framework uppermost in their minds. It highlighted substantial opportunities for capital-raising in Africa – the past two years have seen unprecedented foreign direct investment commitments to Africa as the region becomes more economically and politically strategic. To assist in facilitating this growth, the research suggests IFCs must extend their financial expertise into these investments, alongside private and institutional investors, in a cost- and tax-efficient setting – with support from development finance institutions. Elliot Refson, Head of Funds at Jersey Finance, commented: “We are in no doubt there is a huge opportunity for Jersey in South Africa. Investors want a jurisdiction with political and fiscal stability, with a no-change outlook from a regulatory, legal or economic perspective – and Jersey ticks these boxes.” NEW INVESTMENT MANAGERS HUB A new body – the Channel Islands Wealth Management Association (CIWMA) – has been created to represent Channel Islands investment management firms and provide a unified voice for investment managers. It is led

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by Chair Simon O’Donoghue, Partner at TEAM Asset Management, and Vice Chair Mo Baluchi, Senior Manager at Standard Bank, with a committee comprising: • Euan Dangerfield, Client Director, Cazenove Capital Management • Richard Hughes, Deputy CEO, Brooks Macdonald • Mehul Kotedia, Founder/Director, Mekad and KYCme • Aimee Maskell, Owner, AM to PM Secretarial Services. The CIWMA intends to liaise with local and international industry associations and build alliances with bodies such as the Chartered Institute of Security and Investment and the Institute of Directors. It will also engage with government bodies including the Jersey Financial Services Commission and Guernsey Financial Services Commission, Jersey Finance and Guernsey Finance. At this stage of the association’s development, firms holding Jerseyregulated investment business (A, B, C) licences and Guernsey-regulated (Protection of Investors) investment licensees are invited to be members. A range of initiatives are planned, including sub-committees encompassing technology, diversity and education. JTC ENTERS FTSE 250 INDEX London Stock Exchange-listed JTC has been promoted from the FTSE SmallCap Index to the FTSE 250 Index, reflecting the business’s continued growth and performance since its initial public offering in 2018. Based in Jersey, JTC listed on the Main Market of the LSE in March 2018, having delivered professional services for institutional and private clients since 1987. Its latest interim results, published in September, reported period-on-period revenue growth of 15.2% and an EBITDA margin of 31%. JTC CEO Nigel Le Quesne (pictured) said: “We are delighted to enter the FTSE 250 and would like to thank our clients and investors for their support since our IPO and in particular during the challenges we have all faced in 2020.” n

ASIA EDITION 2020 11

Sustainable finance

A sustainable partnership

Sustainable investment continues to be the hot finance topic globally – and a link-up between Hong Kong and Guernsey is setting a precedent for meaningful partnerships around the world Words: Alex Garrett

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TALKING BY VIDEO link to the UN General Assembly in New York on 22 September, Xi Jinping surprised the world by announcing that China will become carbon-neutral by 2060. For a country that currently produces 28% of all the world’s carbon emissions, the scale of the challenge is breathtaking. China’s intention to peak its emissions by 2030 was already well established, but to move from there to net zero will require an estimated $15trn of investment over the next three decades, according to one recent report by the Boston Consulting Group, Climate Plan for China. That, in a nutshell, is why sustainable investment is the hottest finance topic in the world right now – and nowhere more so than in Asia. According to Kate Hodson, Partner and Head of ESG Funds at Ogier in Hong

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Sustainable finance

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formation of the Task Force on Climate-related Financial Disclosures (TCFD) in 2015. Guernsey has been a pace-setter. In 2018, it joined the UN’s Financial Centres for Sustainability (FC4S), and shortly afterwards created Guernsey Green Finance, with a brief to rapidly develop green and sustainable finance products and services. The Guernsey Green Fund and TISE GREEN – a specialised section of The International Stock Exchange – are two tangible results of that initiative.

GREEN MOVES In Asia, both Hong Kong and Singapore have been making moves to position themselves as Asia’s green financial centre, says Hodson. In Hong Kong, a Sustainable Finance Cross-Agency Steering Group has been formed, pulling together government ministries and the main financial institutions. And both Hong Kong and Singapore have started a consultation

the Hong Kong government issued its first green bond last year at $1bn, which was four times over-subscribed

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Kong, a key component of China’s strategy for combatting its environmental issues is the greening of its financial industry. “The People’s Bank of China has previously stated that public finance can only account for 15% of the funding required to address China’s environmental problems and meet its climate goals,” she says. “Therefore, private capital, whether it comes from onshore or international sources, is going to be critical to supporting the transition to a green economy in China.” The reliance on private capital, Hodson adds, is a global phenomenon and underlines how important it is for sustainable finance to grow rapidly in order to meet that supply gap. Andy Sloan, Deputy Chief Executive, Strategy, at Guernsey Finance, says sustainable investment is currently topping the agenda thanks to a confluence of trends that have been building momentum for decades. Two tangible targets that have focused the minds of governments around the world are the UN’s 17 Sustainable Development Goals for 2030 and the COP 21 Paris Agreement, ratified in 2016, which seeks to limit global temperature rises. Each country has its own individual commitment to emissions reduction. The Covid-19 pandemic has proved a ‘Minsky moment’ for sustainability [when the Roadrunner cartoon character goes over the cliff and finds himself running in fresh air] – just as the global financial crisis did for financial stability, says Sloan. “It’s a physical risk issue,” he explains. “Covid-19 has made people ask: are our practices as a human race sustainable?” The role that private investment needs to play in achieving sustainability, and in tackling climate change specifically, has been recognised for some time. It was first officially acknowledged at the Rio Earth Summit in 1992, when the UN’s Environment Programme Finance Initiative (UNEPFI) was founded. Other milestones include the creation of the Global Reporting Initiative in 2002, the Principles for Responsible Investment launched in 2006, and the

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process with regards to guiding the asset management industry on climate disclosures. In October, Guernsey Finance linked up with the Hong Kong Green Finance Association (HKGFA) to host a webinar looking at the common global agenda of financing sustainability, and how the two jurisdictions could work together in this area. At the event, Tracy Wong Harris, the Deputy Secretary General of the HKGFA, said China’s challenge to become carbon-neutral will require huge capital inflows, in addition to strong green finance policy and implementation. “In Hong Kong, as one of the world’s financial hubs, we are in one of the best positions to channel green finance and to

develop the right ESG products to allow international investors to access the China market,” she added. “Here, like everywhere else in green and sustainable finance, the bond market is best developed so far. “At the end of 2019, the total green bond issuance in Hong Kong was $26bn, and the Hong Kong government issued its first green bond last year at $1bn, which was four times over-subscribed.” During the next five years, this will ramp up quickly, issuing a further $66bn of green bonds. One of the priorities for all financial centres will be to translate the early successes in the green bond market into funds that can inject capital into the development of renewable energy and

other sustainable initiatives. And funds will be the keystone to this market for Guernsey, says Sloan, who also chairs Guernsey Green Finance. He points out that alongside the jurisdiction’s traditional strengths, its whitelisting status for anti-money laundering purposes is a major asset when it comes to ESG investing. How would it work? Above a green fund, he says, you could create any number of private wealth structures to suit the needs of your client, which could, for example, be a wealthy Hong Kong family. Nevertheless, it is early days for the development of sustainable funds. As Sloan acknowledges: “We are short of oven-ready projects to invest in genuine green and sustainable assets right now.”

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Sustainable finance

A priority will be to translate successes in the green bond market into funds that can inject capital into sustainable initiatives

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Sustainable investment does face challenges – greenwashing and how much trust investors can put in the data that’s visible

16 asia edition 2020

For owners of private wealth, he says, there’s a strong impetus to invest sustainably, which has been strengthened by the pandemic. At one end of the scale, Sloan says: “Once someone has made millions or tens of millions, they tend to come to the world with more of a philanthropic mindset. “However, there’s also going to be a massive cross-generational transfer of wealth and the younger generation has a much more emotional mindset about investing for good.” Kate Hodson says the significant factors driving investment include client demand, regulation and increased recognition that ESG factors can have an impact on risk and return. “The driving force really depends on the type of investor,” she explains. “For example, within the family office space this is very much dependent on the mandate. “If you are talking to a fund of funds, they are very likely to be asking about ESG as they ultimately face the same questions from their own investors. “HNWIs have certainly been a huge driver of this demand globally, as well as locally in Asia, and the expectation is that millennials will increasingly look

to invest in alignment with their values.” Research by Standard Chartered Private Bank in 2019 found that ESG funds made up almost a fifth of Asian HNW portfolios. And the bank’s 2020 Sustainable Investing Review found that 90% of Asian HNW investors surveyed were interested in sustainable investments and plan to invest between 5% and 10% in this area. Sustainable investment does nevertheless face challenges. At one level, there is greenwashing – the potential efforts by investment vehicles to appear greener than they are. At another level, there is the issue of how much trust investors can put in the data that is visible. “The availability of ESG data, the reliability of that data, as well as some gaps in the transparency of benchmarks and indexes, has made it harder to measure and effect ESG investments,” says Hodson. The big issue though – on which the future of the planet hangs, no less – is whether sustainable finance will develop fast enough to bring forward the massive investment needed to fund the transition to a carbon-neutral world. And that’s a goal in which financial centres, whether in the Channel Islands or Asia, will have a key part to play. n

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CO M M E N T

Hong Kong’s booming HNW appeal

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JACQUELINE SHEK Executive Director, Trust Services, Zedra

Why the city state continues to be a key gateway for global opportunity

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Singapore

The island state of Singapore punches above its weight as an Asian financial centre. but far from rivalling Jersey and Guernsey, its continued development offers plenty of opportunities for Channel Islands businesses and investors Words: Richard Willsher

Mutual 18 asia edition 2020

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PERCHED AT THE foot of Malaysia and

a short distance from Indonesia across the Malacca Straits, Singapore’s primary strength has always been its geographical position. A journey by ship between East Asia – China, Japan, South Korea, the Philippines and Vietnam – and places west, such as India, the Middle East and beyond, will inevitability pass through or near to Singapore. For a long time, it was considered that its growth as a major sea port, trading centre and financial services hub would be enhanced if it fostered the right communications infrastructure and high-grade skills and education. And that’s what it did, particularly under the leadership of its first Prime Minister and visionary leader Lee Kuan Yew following independence in 1965. The state and business are closely entwined in Singapore – and nowhere is this more in evidence than in the financial services sector, where the Monetary Authority of Singapore (MAS), the country’s central bank and financial services regulator, plays a leading development role.

First and foremost, the authority’s careful and respected regulatory regime supports the integrity of the jurisdiction. This has been vital in attracting business and investment. At the same time, it has identified key aspects of the economy, and particularly financial services, that it wants to encourage. This includes implementing the financial sector’s Industry Transformation Map (ITM), which is one of 23 ITM sector initiatives introduced by the government in its 2016 budget.

STRATEGIC APPROACH As part of this, Singapore’s strategy for financial services is for it to be: • A leading international wealth management centre • An Asian hub for fund management and an investment fund domicile • The leading foreign exchange centre in the Asian time zones. In order to achieve these objectives, MAS

is working with the financial services industry in a number of ways: • Building platforms that enable Asian companies to reach a wider network of international investors • Developing Singapore’s financial ecosystem to facilitate the financing of Asian infrastructure projects • Growing its bond markets for the benefit of Asian businesses to raise debt • Promoting Singapore as the Asian centre for insurance and risk transfer. Part and parcel of these measures is harnessing and developing the most up-to-date technologies, creating shared utilities – such as digital payments – and client identification. Growing its fintech sector is also a priority, as is committing to an education and skills programme to make sure the

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Singapore

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to high-net-worth individuals and families from the whole of the Asian region – North and South Asia, not limited to people with connections to Singapore,” he says. “Their shared characteristic would generally be their level of overall wealth and the need for sophisticated wealth structuring solutions, such as trusts and company service provider arrangements.”

WEALTH MANAGEMENT Hodgson explains that Singapore is increasingly becoming the wealth management centre of South East Asia, South Asia and North Asia, including Japan, Taiwan and mainland China. “We have a number of structures that utilise the services of the Guernsey trust company as the trust service provider, but the relationship management lies with our Singapore team,” he explains. “While Singapore has moved into the trust space over the past 10 to 20 years, the courts in Singapore are not particularly familiar with trusts, and especially with trusts in dispute. “I would say that a lot of trust companies in both Guernsey and Jersey have books of business where the family is living, working and making its money in Asia but it has a Guernsey or Jersey trust as a wealth planning tool.” The key is the level of expertise resident in the Channel Islands and the way in

asia edition 2020 21

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Singapore is increasingly becoming the wealth management centre of South East Asia, South Asia and North Asia

jurisdiction’s financial services businesses have the skills to meet the ITM aims. There is clearly common ground between some of Singapore’s chosen areas of financial services development and those where the Channel Islands have deep and longstanding expertise. In particular, wealth management and the use of trusts is an area where the islands have been playing a leading role for some time. In fund management, and specifically fund domicile, Jersey and Guernsey again have a significant presence of their own. Infrastructure funds is another segment of the market where Channel Islands expertise has played a role in connecting with infrastructure projects from all over the world. It’s perhaps not surprising, then, that a number of Channel Islands businesses have strong ties with partners or sister operations in the Singapore jurisdiction. One of these is Butterfield Group, the Bermuda-based offshore bank and trust company with operations in both Jersey and Guernsey. Paul Hodgson, its Deputy Group Head of Trust based in Guernsey, explains that in 2018 Butterfield acquired Deutsche Bank’s Global Trust Solutions business – which included its Singapore trust company. This fitted well with Butterfield’s global wealth structuring operation. “We provide high-end fiduciary solutions

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Singapore

which this can be added to Singapore’s geographical and business strengths for mutual benefit. And it is a growing market – because an increasing proportion of the world’s personal wealth is being developed in Asia. This is good for Singapore, but it is also healthy for Channel Islands service providers.

While Singapore establishes itself as the go-to financing hub, Channel Islands skills are complementary and valuable

INFRASTRUCTURE FINANCING The development of all forms of infrastructure is a necessity across Asia, including the major populations of China, India and Indonesia. Infrastructure can mean roads, railways, airports, ports, bridges, power generation and distribution, water treatment and delivery. Again, while Singapore is establishing itself as the go-to financing hub, the Channel Islands’ skills are complementary and valuable. Infrastructure projects involving private sector funding often employ limited partner structures. If domiciled in the Channel Islands, these can be tax-neutral. This appeals to investors who, while paying tax on their income in their home jurisdictions, are not taxed again at the fund structure

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level, which might be the case were the fund domiciled in an onshore jurisdiction. A further advantage the islands provide to infrastructure projects is debt-raising through The International Stock Exchange (TISE) in Guernsey. Fund sponsors will typically list their debt in the form of bonds or loan notes, and Jersey and Guernsey’s twin well-regulated and transparent environments are cost-effective and administratively efficient places to do so. Moreover, the islands’ expertise in infrastructure funds is global – expertise gathered in Europe or North and South America, for example, can be harnessed for the benefit of Asian

projects financed through Singapore. Unsurprisingly, both Guernsey Finance and Jersey Finance have led delegations to Singapore and taken part in exhibitions and trade shows in the region to promote the islands’ services and capabilities. In addition, many firms, such as Butterfield, have established, acquired or expanded operations in Singapore in recent years. These include trust provider Hawksford, law firms Carey Olsen and Collas Crill, and corporate services provider Equiom, among others. Perhaps the last word should rest with Butterfield’s Paul Hodgson, who believes the Channel Islands can learn from Singapore’s development. “We have the opportunity for the Channel Islands to be the Singapore of Europe. We have historically invested in the people and the skill sets, just as Singapore is doing. We have the appropriate legal and accounting talent here, which is very, very important as part of the ecosystem that a trust industry relies on. So we have all the ingredients here.” Jersey and Guernsey, it seems, have much to gain as Singapore moves to the next stage in its development as the epicentre of Asian financial services. n

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Wealth management

High stakes A seismic shift in who holds Asia’s wealth is creating great opportunity for financial planners and wealth managers all around the world. But engaging Asian wealth holders is not without its challenges – and will require many to up their game

ASIA, ALREADY THE top region for the world’s super-rich, saw its population of high-net-worth individuals increase by 8% last year, and is predicted to be home to one-third of the globe’s billionaires by 2023. These projections, published in the Jersey Finance and Hubbis report Asia’s Great Wealth Transfer – Implications for the Wealth Management Community this December, come despite all the complications of the Covid-19 pandemic, international trade wars and geopolitical tensions that have hampered economic growth this year. Asia appears to be unstoppable in amassing wealth, which means that the individuals fortunate enough to be part of it will need assistance in managing their financial affairs. The report highlights successful legacy planning as an area where Asian families are in dire need of support. It reveals the findings of a survey conducted across wealth management experts in Asia, showing significant gaps in the provision of financial planning. More than three-quarters (77%) of respondents indicated that less than half of their Asian

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private clients have properly organised succession planning in place. Asia’s wealthy and super-rich families need to urgently advance their legacy and succession planning. Mark Tucker, Head of Wealth Advisory at Barclays Private Bank, says: “While there is no shortage of desire across Asian families to establish succession plans, many lack the knowledge and experience to implement the planning.” Yet Asia’s wealth industry is, according to the Jersey Finance report, totally unprepared for the predicted deluge of clients in need of support. Just 4% of those surveyed believe Asia’s wealth industry is prepared for the upcoming wealth transitions – predicted to be $5trn – to the second and younger generations. And while more than half (52%) of respondents believe the wealth industry is ‘gradually getting better organised’,

opportunities abound for financial planners and wealth managers with experience on inheritance planning and wealth transfer. Indeed, 70% of respondents said that private clients in Asia are more willing than ever to professionalise their legacy and succession planning. But the field is complex and there are many obstacles to overcome in ensuring Asian families receive the right guidance and advice. The first is simple geography. Tucker says members of Asian families are often spread out, which makes it hard to deal with financial matters cohesively. He says: “Wealthy Asian families have increasing touchpoints in a greater number of jurisdictions, which inevitably creates complexity. The wealth planning arena plays a key role in helping Asian families to take a holistic view of their affairs, taking into account multi-

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Wealth management

GAINING CONTROL There are also cultural sensitivities to manage when planning wealth transfer for Asian families. Joe Moynihan, Chief Executive Officer at Jersey Finance, says persuading firstgeneration members to participate can be problematic. “The most daunting prospect [for financial planners] is encouraging the founder generation to share information and to gradually relinquish control,” he says. This is further compounded, Moynihan says, by poor communication among family members and across generations, as well as a perceived unwillingness for some founders to pay for professional advice or to commit the necessary time to prepare properly. Moynihan says: “It is vital for the wealth management community to maintain and build relationships with the founder generation of Asia’s private wealth.” The trick to improving this communication is, according to Joanna Caen, MD of PraxisIFM Nerine in Hong Kong, to ensure that all the family members are engaged with the process. She says: “There’s no point asking the first generation to involve the second

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generation in planning if the second generation is uninterested. Once you know who wants to be involved, you can work to include them as much as possible.” According to Tucker, such a lack of planning often makes it difficult for advisers and managers to get to what is the most crucial and lucrative asset: the family business. “In many instances, the family business represents the asset of greatest value and is often the most difficult asset to transition across generations despite many options to achieve integration and transfer,” he says. Respondents to the survey reflected this experience: 61% said that less than a quarter of their family clients are successful in passing the business to the next generation; 87% said that less than half of such families achieve the right outcomes. Tucker’s reference to the ‘many options’ look to be part of the problem. More than a quarter (29%) of respondents said that families had used the wrong or unnecessary structures when transferring the business.

A lack of planning often makes it hard for advisers and managers to get to the most crucial and lucrative asset: the family business

This led the authors of the report to conclude that whatever the skillset of financial planners and wealth managers, they should defer to experts – usually lawyers – to ensure the successful transition of wealth, be it a business or any other asset. Moynihan says: “A trusted adviser can act as the focal point and catalyst for good solutions. The trusted adviser in Asia can identify many of the key legacy and succession-planning issues and help families move towards the right outcomes. “But to do so, they need to be open to working with and bringing in a wide range of skills and experts, and work across the generations – in other words, be inclusive.”

WORK TO DO As a trusted adviser, there is – according to Jersey Finance – work to do in improving education among Asian families if they are to embrace and successfully carry out wealth transition. While 61% of respondents indicated that the Asian wealth management community is improving its efforts to educate the private client base on the merits of succession and legacy planning, only 4% said this is well in hand, and 35% indicated that ‘far more needs to be done’. Tucker believes that the successful provision of education will be a key factor in deciding who will be successful – or otherwise – in capturing the wealthy Asian family market.

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jurisdictional implications as well as the needs and aspirations of all generations within the family.” To counter cross-border barriers, the use of virtual meeting platforms and other digital technology – perhaps a bugbear for the less tech savvy during the Covid-19 pandemic – will be imperative when dealing with the next generations. Almost nine out of 10 (87%) respondents to the Jersey Finance/Hubbis survey agreed that the digital technologies and connectivity on offer from banks and wealth management firms will be important or crucial to the second and third generations.

Wealth management

IS THE ASIAN WEALTH MANAGEMENT COMMUNITY DOING ENOUGH TO EDUCATE CLIENTS ON THE MERITS OF SUCCESSION AND LEGACY PLANNING? 70 60 50 40 % 30 20 10 0 Totally

Getting more active

No visible change of late

Could do much more

No change of late

Source: Hubbis and Jersey Finance, Asia’s Great Wealth Transfer – Implications for the Wealth Management Community, 2020

OF YOUR ASIAN CLIENTS THAT HAVE ORGANISED SUCCESSION PLANNING, HOW WOULD YOU CHARACTERISE THEIR PLANS, STRUCTURE AND THE OVERALL EFFECTIVENESS? 70 60 50

“Wealth managers who prioritise the holistic cross-border multi-jurisdictional needs of their clients will be those capable of building strong relationships with Asian families,” he says. “Wealth managers who support clients during the key moments in their lives, whether that be major business or family events, are better placed to fully serve client needs from a wealth management perspective.” Additionally, it is time for providers to pare back the information they send to clients. Caen argues that many clients are overwhelmed by the reams of paper and documents sent by their advisers. She says: “This does make some input less effective because it can be drowned out by other input and/or families can be turned off from engaging.” Caen says advisers will better serve their clients if they start by asking fundamental questions as to their areas of interest, rather than selling them products from the get-go. She adds: “Families need to understand in general terms only what options are available to them, so they can decide what, if anything, best suits their needs.” Asia’s wealthy families offer genuine business potential for financial planners and wealth managers, yet if they are to capitalise on this opportunity, it is – in the words of Jersey Finance – time to “up their game”. Firms need to foster trust with families, working with each generation to ensure they understand what is involved, and that they have robust governance in place before attempting to move forward. The successful organisations will be sympathetic to the cultural nuances and be willing to take time to educate and improve communication. And for those that are patient and prepared, the spoils look substantial. n

Hurdles to Asian families’ successful wealth planning

% 30 20 10 0

Outstandingly good

Quite good but could be improved

Just about OK

Not great but better than nothing

Very poor

Source: Hubbis and Jersey Finance, Asia’s Great Wealth Transfer – Implications for the Wealth Management Community, 2020

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• First generations not willing to relinquish information and control • First generations not willing to consider different generations’ needs • Family not willing to pay for expert advice • Lack of time and focus to organise affairs properly • Poor intra-family communication

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The ESG conversation in Hong Kong With technical and experienced teams in Hong Kong and the Channel Islands, Ogier was well placed to take part in the recent Guernsey Finance Hong Kong Masterclass, supported by the Hong Kong Green Finance Association. Ogier’s Head of ESG Funds and Hong Kong-based Partner, Kate Hodson, joined the panel at this event, discussing the global agenda of financing sustainability and how this is shaping up in Hong Kong INTEREST IN ESG is now truly global.

According to a 2019 survey by UBS of more than 600 asset owners in 46 countries, 78% are already integrating ESG principles into their investment processes. It has grown substantially and rapidly from being a fairly niche consideration to a demand that has driven changes in regulation and governance in jurisdictions and financial hubs around the world. Until relatively recently, Asia was not demonstrating a significant interest in

There has been something of a scramble in key Asian locations as market participants ensure they have teams to support clients in ESG

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or awareness of ESG in the context of financial markets, particularly compared with the EU and US. But over the past 24 months, we have seen dramatic changes in the conversations around ESG in the region, and increasing numbers of Asian investors and asset managers signalling their commitment in this space. In China, this has in part been driven by the development of new policy directions with a strong top-down influence. Hong Kong and Singapore have seen intervention by regulators to help drive this. In Hong Kong, for example, five financial regulators and two government bureaux published a joint statement on 5 May 2020 announcing the establishment of the Green and Sustainable Finance Cross-Agency Steering Group. The group’s aim is to drive green and sustainable finance policy in Hong Kong and coordinate the management of climate and environmental risks to the financial sector. Alongside these developing regulatory and policy frameworks, the momentum behind sustainable investing has been building. There has been something of a scramble in the past year in key Asian locations as market participants seek to ensure that they have the teams with the skills and expertise to support clients in ESG integration, due diligence and reporting. In early 2019, global management consultancy Bain & Company published findings that only 13% of Asian asset managers were integrating in ESG. We would hope those numbers would now be growing, given the level of momentum that has been gathering with the move to greater ESG integration. However, thematic investing has not yet caught up to the levels seen elsewhere, and the focus in this area has been somewhat lacking. While the conversations we are having are positive, we do still need to

be careful not to overstate the position as to the volume of capital flowing towards investments that have a positive, quantifiable environmental or social impact. And this is ultimately what is needed if problems as large as climate change are to be solved. Whereas in the US and EU asset owners have been a key driving force for sustainable investing, until recently this hasn’t been as significant a factor in Asia. We are possibly now at an inflection point, having seen some of Asia’s largest asset owners, including Japan Post, GPIF and the Hong Kong Monetary Authority, becoming signatories to the PRI (Principles for Responsible Investment). With the PRI now imposing obligatory reporting measures, one might reasonably predict that the flow of ESG considerations down the ‘food chain’ from asset owners to investee companies should pick up the pace. Our experience on the ground here in Hong Kong is that considerations of environmental and social factors as they relate to finance are growing. We are committed to this trajectory such that we have hired our own Head of ESG and Impact Advisory so that we can better assist clients on this journey. What is clear is that, as an industry, we need to support and help each other on this curve and contribute, together, to the body of knowledge, analysis and thought leadership. Raising the level of awareness and understanding in Asia will be critical for the growth of sustainable investing and its ability to go beyond ‘lip service’. n

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For further information or to find out more about our expertise in Asia, go to www.ogier.com or contact one of our team.

asia edition 2020 29

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Expat banking made easy Becoming an expat can be an exciting adventure. And it’s important to find a banking partner who can support your needs and keep you connected to home OVER THE PAST 20 years, Asia has become a powerhouse of global growth. Investments in technological breakthroughs and entrepreneurs seizing every opportunity have resulted in countries such as Hong Kong, Singapore and China exploding onto the scene with cutting-edge businesses. To support this surge, specialist skills have been sought worldwide to keep abreast of evolving trends, resulting in the emergence of numerous expat communities – all of which enjoy the Asian culture and lifestyle. The Singapore government, for example, is investing heavily in financial technology, or fintech, and businesses are constantly looking to attract foreign expertise and skills in industries such as telecommunications and information technology, as well as finance. However, when it comes to savings,

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many British expats prefer to stick closer to home. Becoming an expat can be a lifechanging and exciting event – a whole new lifestyle awaits. However, you may face limited choices for UK savings accounts, as many UK banks and building societies do not accept applications from overseas residents. Skipton International specialises in providing expat sterling savings accounts, understanding the challenges that expats sometimes encounter, and offering a simple and straightforward process to open accounts. A range of sterling savings accounts will meet most expat savings needs – easy access, notice and, occasionally, fixed rate bonds – and Skipton’s online service and telephone banking ensures access wherever you might be located in the world.

Based in Guernsey in the Channel Islands, Skipton International is located in one of the world’s most well-established financial centres, and it is no surprise that Skipton has savings customers in more than 100 countries. Since the early 1960s, savers from the UK and around the world have chosen to place their money and confidence in Guernsey’s banks. In the subsequent 50-plus years, those in Guernsey’s banking sector have responded to new cultural and digital trends to ensure that the services they provide are those demanded by savers and their family members. Individuals who are not resident in Guernsey are not taxed by the jurisdiction. This means that while non-residents can hold cash deposits without incurring any liability to Guernsey income tax,

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the reporting obligations rest with the individual at their place of tax residency. Guernsey has legislation to meet the obligations of FATCA and was an early adopter of the Common Reporting Standard (CRS).

EXPATS IN SINGAPORE Caroline and John Brown (pictured) are expats who live in Singapore. Caroline says: “The reason why people value Skipton International is because, as well as having an Asian bank account, it is important to have an account with connections to the UK. “However, most banks and building societies in the UK are not friendly to having customers who are based overseas. Skipton International is different in that it recognises that people want to retain their connections and does not make it difficult to do so. “We appreciate the flexibility and responsiveness of Skipton International compared with traditional banks and building societies. For example, if you want to transfer money between a UK high-street bank and an Asian account, it’s a nightmare, but Skipton does not put obstacles in the way.” Nigel Pascoe, Skipton International’s Business Development Director, says: “The last decade has seen the world change enormously. With the ongoing Brexit trade deal saga, and the impact of Covid-19, the world remains truly tumultuous. “Savers have also faced challenging times, with interest rates falling to

Skipton International recognises that people want to retain their connections, and does not make it difficult to do so

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historic lows. The recent news about NS&I reducing its rates has proven to be extremely disappointing for those who have savings with the provider, including expats who had perhaps assumed their money would continue to earn attractive returns. “The advantage of saving with Skipton International is that we operate a simple model whereby all decisions are made locally and swiftly. Our aim is to be open and transparent with our customers and we do our best to offer simple and customer-friendly products. We really do understand the expat market and the challenges it can bring.” The final word goes to Caroline Brown: “My husband and I moved to Asia 10 years ago and have lived in Singapore, Hong Kong, China and Japan. “We still want to maintain our connections to the UK and one of the frustrations we have experienced here is dealing with UK banks and building societies.

“On occasions, we have found ourselves unable to complete certain transactions and have had to wait until we have flown back to the UK to see family. This is inconvenient and we have ended up losing out on the best interest rates. “In the current environment, especially when we cannot fly due to the Covid-19 pandemic, Skipton International has shown that they are different. They are flexible and customer-centric. They understand that we cannot pop into branches or that it is not always possible to wait for something to arrive in the post. “Skipton International has enabled us to transfer money quickly and effortlessly between our Asian bank and Skipton. They are an approachable business and we can message our contact at Skipton International at anytime. “We would highly recommend anyone with a busy lifestyle living overseas to give Skipton International a call and see how they can help you.” n

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To find out more, telephone (+44) 1481 730730 or visit www.skiptoninternational.com

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Global investment

We are the

world From education to assets, Asian family wealth has a tendency to traverse multiple countries. So what impact will this have on the Channel Islands and what specialist support and knowledge is required to ensure success?

KOFI ANNAN ONCE said that to argue against globalisation is like arguing against the laws of gravity. And it’s true that even pre-Covid, the world felt smaller and more integrated than it ever has. In recent years, distance, time zones and communication challenges have all been overcome by technology and innovation, resulting in an exquisitely interconnected and, until recently, globally mobile populous. That’s particularly the case with high-net-worth and ultra-high-net-worth individuals, who are more likely to live, work, study and own businesses and assets across continents. So much so that a second passport or permanent overseas residency is a necessity for success in these circles. Asian families in particular have spearheaded this approach to international living, and continue to embrace it today. “Historically, many wealthy families in Asia aspired to send their children

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overseas for education with a feeling that this would provide a greater chance of success,” says Mike Reed, Head of Wealth Management, Southeast Asia, at RBC Wealth Management. “These days, Asia is renowned for high-quality schooling – so this situation is changing. But prestige and habits pass through generations. “As such, we are now seeing many wealthy cross-border families splitting their time, as well as their businesses, between numerous jurisdictions.” “Wealthy families all over the world put a great deal of focus on the education of their children,” agrees Alice Lau, Executive Director, Head of Private Wealth Services, at Intertrust Hong Kong. “And for parents in Asia, this meant sending their children elsewhere to study – to the US, Canada, the UK or perhaps Australia. This isn’t by any means a new phenomenon, it started some time ago.

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Words: Sophie McCarthy

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Global investment

â&#x2013;ź

New-to-wealth families are now making global decisions and planting roots in places they have grown to enjoy

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Global investment

As a direct result, the families in question become more international. The children have a wider wield and they speak English to an extremely high standard. “All of this combined means the next generation is very well placed to help their parents look after assets and businesses wherever they may be placed.” Globally, says Reed, HNW and UHNW families in Asia are also often deliberately looking to diversify their lifestyle. “Rapid economic growth in Asia has helped propel families to fortune through business ownership and real estate, so this trend has been in the making for decades. New-to-wealth families or second generations are now making global decisions and planting roots in places they have grown to enjoy. “This means they are looking for something different to what they have in their home base of Asia. Once the roots are established, they transition through generations and the family tree grows on both sides of a border.”

POLITICAL PUSH Lifestyle reasons aside, why else might families and individuals opt to operate both professionally and personally across multiple jurisdictions? Reed believes it is the current economic and political climate that may be

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encouraging families to take this global approach to their finances. “Uncertainty around the world has contributed to the desire for diversification and a safety net for assets,” he explains. Joanna Caen, MD of PraxisIFM Nerine (Hong Kong), believes HNWIs look to tie themselves to certain jurisdictions because of the specialisms those regions offer. “Hong Kong, Singapore and Switzerland all have well-known, well-regarded wealth management businesses that attract families from all over the world. For others, favourable tax regimes may also be a reason to make ties – such as Britain’s highly successful non-dom programme.” Regardless of the reasons for doing so, living and conducting business in this way have an impact on financial planning. “While the concept of a global footprint may be glamorous, it is certainly complex,” says Sarajane Kempster, Director, Fiduciary Specialist Team, RBC Wealth Management. “Each jurisdiction has its own rules, regulations and customs that may cause frustration or challenges, particularly when clients are considering tax residency, crossborder wealth transfer and estate planning, and other business needs that operate across international borders.” Reed adds: “Any time you introduce different jurisdictions to wealth management discussions – whether it’s

people, source of wealth or assets – it increases the complication of their advice needs and requirements. “Globally mobile HNW and UHNW families in Asia may have wealth structures, business interests and properties in multiple countries. Family members could be dotted around the globe and lifestyle choices could mean spending a certain amount of the year in different locations. “And at any time, these interests may need to be managed, bought, sold, migrated across borders or transferred to the next generation.” The Channel Islands continue to be a popular choice for wealthy families when it comes to trusts. Kempster explains: “Global families often have ties to the Channel Islands owing to their outstanding reputation for managing dynastic structures and estate planning, as well as facilitating wealth through the generations and their movements around the world. This is facilitated by strong access to a world-class legal framework and professional community.” Kempster also considers the philanthropic endeavours and ambitions of HNWIs – and the fact that many wish to undertake these efforts quietly – as a driver for the Channel Islands. “We are seeing a number of Asian families choosing to create a charitable

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Global investment

trust or foundation to fund philanthropic projects without publicity,” she says. “As a result, families are drawn to the Channel Islands, which have built up a reputation as centres of excellence for these sorts of structures.”

THE PERFECT BLEND So, taking these complexities into consideration, what support, knowledge and experience are required when individuals and families have multifaceted trust structures established within the Channel Islands? “Where the trust structures are more complicated, our experience is that clients might require a bit more handholding than usual,” Lau explains. “For most of our clients, this is the first time they have been positioned in this way. “This means we will share with them our own experiences – they like to know how other clients use these structures; how, for example, we have worked with and obtained advice from other professionals, such as lawyers, in these jurisdictions.” Marcus Leese, Partner at Ogier, also emphasises the need for a well-established team. “Asian-based clients with structures in the Channel Islands need advisers with a material presence here and with deep experience and expertise in local law, regulation and administrative practice.”

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Clients need a team that includes advisers based in Asia. It’s imperative they have the relevant cultural background, as well as fluency in the client’s first language

However, he is keen to stress that this is definitely not enough on its own. “These clients also need a team that includes advisers based in Asia,” he says. “It’s imperative that they have the relevant cultural background, as well as fluency in the client’s first language. This

will mean that they are able to answer client questions and concerns immediately – with empathy and understanding – and in the way that best suits the client.” Leese adds: “The complete advisory team needs to include representatives from both these camps.” Kempster agrees. “Servicing Asian clients with complex trust structures established in the Channel Islands requires in-depth understanding on the ground, both in the islands and in Asia, and experience managing assets across legal jurisdictions,” she says. However, these relationships are a two-way street, she adds. “The service provider needs the knowledge and experience to ensure that the structure is created and run in a way that meets the family’s objectives; the family also needs to understand why a more convoluted structure can be a better solution than the historic simple BVI company.” While education appears to underpin the reasons that family wealth has a tendency to be global, it is knowledge and the sharing of experience that lie at the heart of managing it effectively. Kofi Annan himself once summed this up aptly: “Knowledge is power. Information is liberating. Education is the premise of progress, in every society, in every family.” n

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Hong Kong

Hong Kong rides the tide of

uncertainty

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Hong Kong

Words: Steve Falla

IT IS NOW almost 25 years since Britain passed Hong Kong over to China and, as a special administrative region for that country, it has continued to thrive as a financial services centre. Prior to the handover in 1997, assets were fast moved out of Hong Kong and alternative structures set up overseas. But in the decades since, the trend has very much been for this business to return. For Hong Kong financial services businesses, change has been a constant – one that continues to present opportunities and challenges for the region’s wealth managers, particularly in the wealth

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planning and structuring sectors, which tend to look to the longer term. Hong Kong is in a strategically important position, given the rapid growth of wealth in the Asia region – growth that saw a 17-fold increase between 2001 and the end of 2019, when total Chinese household wealth reached $63.8trn. As a result, it remains the gateway through which wealthy Chinese families can structure their wealth in other parts of the world, and through which financial services providers elsewhere can gain access to Chinese wealth.

FIGHTING IN THE STREETS Among recent events impacting Hong Kong and its reputation are the high-profile protests by hundreds of thousands of the territory’s citizens, as well as Covid-19. Despite the high-profile coverage of these, they appear to have had little impact

on financial services in Hong Kong, and trust and private client practitioners are reporting ongoing growth as wealthy Chinese families contemplate structuring and succession planning. The becalming of Hong Kong, following a series of political changes that caused widespread dissatisfaction, distrust in the government and social unrest – and which shut down offices and public transport – was the result of China imposing a national security law that’s been compared to the US Patriot Act. This also held some positives for financial services providers. Jacqueline Shek, Executive Director, Trust Services, at Zedra in Hong Kong, says: “In the 1980s, in the lead-up to the handover from Britain to China, we were [actively] planning around political risk. Now, it’s just another facet that people think about. “The recent change in the political

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Political and social unrest in Hong Kong may have made the world’s headlines – but this hasn’t unsettled the territory’s key role in structuring and succession planning for wealthy Chinese families

Hong Kong

environment made people think in terms of family wealth planning and trust structuring again. Wealth structuring has always been about planning for risks, and it is just one aspect to look at now. “Political risk is one influencing factor driving demand for our services,” continues Shek. “A far bigger factor in our part of the world is the rapid rate at which wealth is accumulating in Asia, particularly among Chinese entrepreneurs in the fintech and biotech space.” Covid-19 has also played a part in increasing Asian families’ focus on succession planning, she adds. “When your mortality is at issue, people are called to action more than would be the case if times are good and setting up a trust or writing a will can be put off until another day.”

TRADE WAR TROUBLES Of more concern than politics on the ground in Hong Kong has been the trade war between the US and China. Shek says that sanctions, some of which named Hong Kong politicians, left the territory caught in the middle like a pawn. James Russell, Managing Director at Equiom Asia, agrees – but anticipates that the US election will have improved the situation somewhat. “The concern was that Trump would go another step further and impose sanctions against anybody who was a member of the Chinese Communist Party. Many in Hong Kong are expecting a more diplomatic approach from Joe Biden,” he says. One of the issues arising from the US actions had been a conflict for American financial institutions in Hong Kong. Some feared the national security law would have criminalised their directors for carrying out the US sanctions. But overall, Russell sees the national security law as a stabilising factor for the finance centre, after high-profile media coverage had led some clients to begin to look to Singapore as an alternative safe haven for their business. “It’s been pretty standard that if you are an individual in Indonesia, the Philippines, China or South East Asia who has collected a large amount of wealth, then you would want to put that somewhere safe and stable, with a good rule of law – and your choices locally would have been Hong Kong or Singapore.” Despite this, recent Chinese and Hong Kong politics have not been the overriding factor influencing the investment habits of wealthy Asians. As Shek explains: “The clients we work with are predominantly mainland Chinese families, Hong Kong families or South East Asian families. There’s significant wealth in Hong Kong and no-one’s exiting it. They’ve kept their assets here.

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Hong Kong is still China’s route in and out for Chinese people doing business abroad and foreign companies looking to move into China

“Capital markets are strong and the financial market is quite strong here. Also, Asians tend to invest quite heavily in real estate and, underneath a global structure, if your real estate is in Hong Kong, your asset is still here and no-one’s selling. People are still bullish about real estate.” Any adverse factors on trust businesses are far outweighed by the ongoing trend for Asians to pass on wealth through succession planning, she adds. “The ageing patriarch or matriarch who needs to pass on wealth is driving the business here,” she says.

GLOBAL PROTECTION Russell, meanwhile, points out that trust business in Hong Kong is less about tax planning than is the case with structures settled in some European finance centres. Rather, the priority is wealth protection and access to the rest of the world. Russell also notes that structuring around the listing of Chinese family businesses has refocused recently to be more China-centric.

“That is what’s really driving the market,” he says. “Three years ago, if you were the patriarch of a Chinese family business and you decided it was time to list it, you would have looked to the New York Stock Exchange. But because Trump has made it so difficult for Chinese people to do business in the US, that business is all coming to Hong Kong and it works for the Chinese. It’s a well-trodden path that lawyers in Beijing and Shanghai have walked dozens of times.” Ultimately, there is a sense that Hong Kong will prosper as China’s own global finance centre. Russell believes the ease of doing business with the rest of the world from Hong Kong and its evolution towards becoming a Chinese-orientated financial services centre is in the Chinese government’s interest, as it can control the flow of capital in and out of Hong Kong. “It’s an enormous space and a very interesting space – China’s got a good chunk of the world’s population and Hong Kong is still very much China’s route in and out for Chinese people doing business abroad and foreign companies looking to move into China,” he says. However, not everything is clear. With Hong Kong set to become part of China in three decades’ time, there is uncertainty as to how the separate legal system in Hong Kong will evolve. It may no longer be one country with two systems, which could have implications around the judgement of contentious trust issues. Russell concludes: “I generally say to clients: you can build a trust deed that quite easily enables you to move the trust to another jurisdiction if it later becomes problematic to be in the jurisdiction you’re in now. There’s no problem today. But we need to make sure that, if there is a problem in the future, we are able to do something about it.” n

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Carey Olsen is a leading offshore law firm advising on Bermuda, British Virgin Islands, Cayman Islands, Guernsey and Jersey law across a network of nine international offices, including Hong Kong and Singapore. Our advice is delivered by an approachable and experienced team who have fluency in a number of languages, including Mandarin, Cantonese, Shanghainese, Bahasa and English, and who work in partnership with our clients to help them achieve their objectives. We have the expertise and resources to handle the most complex international transactions combined with a personal approach to business. To find out more about how we can be of service, please visit careyolsen.com

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Trusts law

A matter of trust

Why are wealthy Far East families and entrepreneurs increasingly turning to the Channel Islands to set up trusts and protect their assets? THIS YEAR, CHANNEL Islands-based law firm Bedell Cristin launched a comparative analysis into the trust structures of Guernsey, Jersey, Singapore and Hong Kong. The catalyst for the work was an increasing demand from Asian and Far Eastern clients to discover more about what offshore services were offered in the Channel Islands. “They often come to us for advice about where best they can set up a trust structure to lessen risk,” explains Bedell Cristin Partner Nancy Chien. “They are very familiar with Hong Kong and Singapore structures, for obvious reasons, and even the British Virgin and Cayman Islands, but they don’t know the Channel Islands so well. “Although their knowledge is improving, we felt it would be helpful to do a more detailed analysis to help meet the increase in demand.”

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Chien discovered that, despite the huge geographical differences, there are a number of fundamental similarities between the jurisdictional trust structures. But there are also enough key differences to ensure that Asian clients could take advantage of getting closer to the Channel Islands in terms of asset protection.

COMPARING STRUCTURES The starting point when comparing trust structures is that those in Hong Kong and Singapore are modelled more on English law and are therefore not as modern as those seen in the Channel Islands. The Singapore trust period is for a maximum of 100 years, so those looking for perpetual trusts – those that will last for generations – may well choose to look to Jersey, Guernsey or Hong Kong instead. Another fundamental difference is with reserved power trusts. In Hong Kong and

Words: David Craik Singapore, settlors have power over investments and asset management only – compared with a much wider range in Jersey and Guernsey – without invalidating the trust. Other differences include beneficiaries’ right to information, firewall legislation, dispute resolution and non-charitable trusts (see box overleaf). As a result of these differences, and as awareness of these offshore comparisons grows, Chien expects more clients to look to Guernsey and Jersey. “Previously, it was difficult for people in Asia to understand why they would want to have structures in the Channel Islands, because they’re so far away from where the clients are based,” she says. “But clients are beginning to understand that Jersey trust law in particular is very robust and flexible. Indeed, the whole regulatory regime and financial services

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sector is more stable and more mature than jurisdictions such as Singapore. It is tried and tested and has an excellent reputation.” Chien highlights the work of bodies such as Jersey Finance in making advisers and clients more aware of what the islands offer. Channel Islands firms such as Bedell Cristin are also setting up offices in other jurisdictions, including Singapore, to help attract new business. “Clients are now better suited and equipped to consider choosing new jurisdictions,” she adds. “It is not just based on location and convenience anymore. It is more of a holistic solution.”

DIFFERENT TRUST FOR DIFFERENT NEEDS Alongside this enhanced awareness of the options available, interest in the Channel Islands has been driven by the growth of high-net-worth individuals (HNWIs) in Asia in recent years – a result

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of the region’s economic boom, highly valued listed businesses and thriving entrepreneurial sector. But what kinds of trusts are Asian clients seeking from Channel Islands providers? Chien believes reserved power trusts are proving particularly popular. “There is a lot of young money with very wealthy entrepreneurs in their 30s and 40s,” she says. “They want to keep control of their assets and not just have the power of investments but also to appoint beneficiaries or vary the trust deeds.” Wisdom Hon, Senior Associate at Ogier, adds that these younger wealthy entrepreneurs are also looking for more guidance on long-term family asset protection. Recent geopolitical events, such as the social and economic unrest in Hong Kong, have played their part in this. “In Hong Kong over the past few months, we have seen more and more

people looking to set up trusts offshore rather than in Hong Kong,” says Hon. “They are worried and looking for stability. Their wealth is enormous for their age and they particularly want better and earlier succession planning.” These entrepreneurs are still very active in their businesses, and they have young children and are concerned that creditors could come and claim their assets if things go awry. “Where they want to ringfence those assets for their family before things go wrong, using a trust is one of the options,” Hon says. “In addition, their businesses and families may have expanded abroad, and they may want more tax and estateplanning advice.” Asian clients are also attracted by alternative dispute resolution availability in Guernsey and Jersey trust structures. “If there is a dispute in a Hong Kong

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Trusts law

Take your time to build trust with clients and understand the culture – relationship is everything in Asia

Comparing trusts across the four jurisdictions or a Singapore trust, litigation is a usual avenue for dispute resolution,” Hon says. “In Guernsey and Jersey, it is possible to set out in a trust deed that a dispute should be resolved by mediation or arbitration. “Chinese entrepreneurs like arbitration, as it is widely used in a commercial context in China. Arbitration keeps the dispute private and confidential, with less risk of attracting the media’s attention.” Despite all of this, the picture is not as simple as a stark choice between ‘Channel Islands, good; Asia, bad’ or vice-versa. Chien says they do not have to be mutually exclusive – a combination of Channel Islands and Asia solutions potentially produces the most advantageous result. “It is a case of finding the right structures for each individual,” she says. “It is also very common to choose a Jersey or Guernsey law-governed trust structure but to have the trustee based in Asia. “That means they are in the same time zone as the settlor and they don’t have to worry about any misinterpretations around language.”

CULTURAL SHIFTS There can also be confusion over culture. “In the West, for example, we are accustomed to speaking to different advisers for different issues, such as a conveyancing lawyer for a property purchase or a corporate lawyer for

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business,” Chien says. “Asian clients prefer to have a single point of contact for all their legal needs. “They are also sensitive about giving you personal information for the first few meetings – it takes quite a while for them to build up trust. But don’t think their reluctance means that they have something to hide.” Speaking the same language also helps. Chien calls on her Mandarin skills to better explain the nuances of Channel Islands tax structures to Chinese clients. “You need to be tolerant, patient and flexible when dealing with Asian clients. There is a big market out there,” she says. Hon agrees that her Chinese language capability and understanding of Chinese culture help her better connect with Chinese clients and that the flexibility of Jersey and Guernsey laws provides a good solution for Asian clients. “Jersey and Guernsey fiduciary practitioners need to collaborate with local advisers in Asia to develop the Asian market,” she says. “Speaking Chinese is important, but having local market intelligence is the key to success. Every family has its own features. Families coming from different parts of Asia can be vastly different. “Take your time to build trust with your clients and understand the culture. Relationship is everything in Asia.” n

 N on-charitable purpose trusts Hong Kong and Singapore do not yet permit these.  Perpetuity period Singapore is the only jurisdiction with rules on perpetuity, limiting the trust period to a maximum of 100 years.  Asset protection All four jurisdictions have statutory provisions to prevent trusts being attacked by forced heirship provisions. Guernsey and Jersey’s statutory firewall provisions go further by also restricting the enforcement of foreign court judgements. In addition to court orders, Jersey’s provisions also restrict the enforcement of decisions by foreign tribunals.  Settlor reserved powers The statutory list of powers that can be reserved by a settlor without invalidating the trusts is far more extensive in Guernsey and Jersey than in Hong Kong or Singapore, both of which limit reserved powers to investment and asset management.  Private trust companies While all jurisdictions permit private trust companies, Hong Kong does not have specific legislation to regulate private trust companies.  Power to vary Unlike Guernsey and Jersey, the courts in Hong Kong and Singapore do not have the power to vary trusts on behalf of a minor, unborn or unascertained beneficiary.

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Advertising feature

Assessing inward investment into the UK from emerging markets Steven Landes, Managing Director, Corporate Services, at Hawksford, explains why investors from emerging markets are significantly investing in and supporting the UK economy

TO REALLY UNDERSTAND the role that investors from emerging markets play in foreign direct investment (FDI) into the UK, we need to consider a broader range of non-traditional investment factors. Looking at data across these investment classes over the past three to five years enables us to identify trends that show which markets are heavily investing in the UK and which are likely to become more prominent supporters of the UK economy in the future. It won’t surprise many readers that one region increasingly investing in the UK is Asia. The UK has traditionally been a very open economy, attracting a significant amount of FDI. From January 2009 to August 2018, London was the most successful city in the world in attracting FDI, with 4,110 projects – ahead of Singapore with 3,832 projects and New York with 2,854 projects, according to FDI Intelligence. When it comes to the location of European headquarters of Fortune 500 companies in 2018, the result is even more startling, with 87 headquartered in London, followed by Geneva as the second most popular with just seven and then Amsterdam with five. It remains to be seen whether this strength will continue after Brexit. Looking at sources ranking countries based on inward UK FDI, only India (£12.5bn, 18th) and China (£9.5bn, 20th) from the traditional emerging markets (otherwise known as BRICS – Brazil, Russia, India, China and South Africa) feature in the top 20 (Office for National Statistics, 2018). On the face of it, this may seem unexpected – but it’s important to remember this is only based on traditional

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FDI that results in investment into companies and directly creates jobs. If you take a broader view, including investment in residential property and students attending UK educational establishments, the results are markedly different. There was a time when Russian money flowed into luxury London real estate. In 2008, a leading London estate agency stated that between 30% and 40% of all luxury real estate purchases by international buyers were by Russian investors. However, between 2014 and 2016, investors from the Far East were the new big buyers of London property, with 61% of all new build properties sold to overseas investors from Hong Kong, Malaysia and China (University of York study, 2017). Similarly, for sales of mortgaged property in the London area to overseas buyers, just over half came from Singapore and Hong Kong alone (University of York study, 2017). And these trends are not just confined to London. Second-tier cities are also benefiting from a new wave of Asian investors in buy-to-let investment property. According to Georg Chmiel, Executive Chairman of Juwai, Chinese buyers are purchasing build-to-rent properties in Manchester and Bristol to house students studying in the UK. The statistics for foreign students also show large numbers coming from emerging Asian countries. For example, in 2018/19, of the 485,000 foreign students in the UK, 120,000 were from China, 27,000 from India, 20,000 from the US, 16,000 from Hong Kong and 14,000 from Malaysia. This equates to 36% of all foreign students coming from emerging Asian countries (www.studying-in-uk.org).

The economic impact of these students on the UK is much greater than simply the tuition fees and living expenses they pay. It also includes some parents buying property for their children to live in while they are studying in the UK, as well as foreign students deciding to stay in the UK after they have graduated. These results are even more surprising when factoring in a significant increase in taxes on foreign ownership of UK residential property. That includes the Annual Tax on Enveloped Dwellings (ATED) for properties with a value of more than £500,000 owned by a company, and a 3% stamp duty surcharge for a secondhome purchaser. This will be supplemented by a further 2% surcharge on foreign purchasers of UK residential properties from 1 April 2021. So while official FDI for emerging markets may not be very high, taking a broader view of investment shows that investors from emerging markets are significantly investing in and supporting the UK economy. The classification of a jurisdiction as an emerging market is also changing, with Russia and Brazil being eclipsed by economic growth in Asian countries such as Malaysia, Hong Kong and Singapore. In the future, one can only see investment from these emerging markets increasing. The UK’s stellar education system, trustworthy legal and political system, and being home to one of the most respected financial centres, all contribute to making the UK a very attractive location to investors from emerging markets. n

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For further information, please visit www.hawksford.com/contact-us

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Investment trends

Go West

Asian investors, from pension funds to HNWI s, are as keen as ever to steer their capital to the West, so what does that mean for the Channels Islands as the structuring jurisdiction of choice?

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Investment trends

Words: David Burrows

BROADER APPEAL What has changed in recent years is that investors now come from a more diverse range of countries, with investors from Singapore, Taiwan and Korea now investing heavily in Europe. Korean investment rose 122% year-on-year in 2019, to €12.5bn. The rapid rise in the economies of Asian countries is resulting in a growth of long-

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term savings, which also drives the size of pension funds. In China, population controls from the 1970s mean the working-age population is now at its peak, which is also driving investment capital growth. Furthermore, in 2012, the Chinese Insurance Regulatory Committee relaxed restrictions allowing domestic insurance companies to hold overseas investments, which increased the capital available. There is no shortage of money to invest, and a need for diversification means investors are looking to established foreign markets with attractive valuations.

MATURING MARKET Real estate has long been regarded as a safe asset for Asian investors. But a key factor now is how the market is maturing. Daggett elaborates: “In years gone by, trophy assets seemed to be the main prize of the Asian investor. You are now more likely to find Asian purchasers looking at logistics assets in Dunfermline in Scotland, or student housing in Birmingham.” Alasdair McLaren, Head of Private Wealth, Guernsey, at IQ-EQ, agrees that investors are looking beyond central London landmarks and towards educational institutions.

“The reason is that a large number of the current generation of Asian investors have been educated in Europe and have seen the opportunities. A lot of UK schools have expanded into the Far East too, so there is more familiarity,” he says. “The focus is not just on prime central London property, either. There is less interest in properties on Bond Street or stores on Oxford Street and more in ideas outside the M25.” Although investment in data parks and distribution centres might not sound overly sexy, on the back of Covid-19, these are being perceived as growth areas with higher yields, he adds. So has there been an increased interest from Asian investors in ‘cheaper’ assets across Europe as a result of the coronavirus crisis, where lockdown restrictions have driven valuations down? Not at the scale initially predicted, says Daggett. “The Covid-19 pandemic has restricted the ability of investors to visit the UK and assess potential property targets,” he says. “A brief lull between coronavirus waves in the summer, when investors could get boots on the ground, resulted in a bit more movement in the market, but Covid-19 has affected the nature of properties sought, rather than their price tag.”

CHANNEL ISLANDS’ INCREASED ROLE

in years gone by, trophy assets were the main prize of Asian investors. you are now more likely to find them looking at student housing in Birmingham

The ongoing interest from Asian investors in European assets has implications for the Channel Islands as the structuring jurisdiction of choice. Jon Le Rossignol, Group Partner at Walkers’ Jersey Banking and Finance Practice Group, says the Channel Islands have not historically been used for holding European assets outside of the UK, but there has been a trend towards this in more recent years. This is particularly the case among UHNW investors and family offices, given the professional service levels and familiarity with real estate as an asset class across the islands. From a corporate and funds perspective, Wilkins stresses that we are already seeing Jersey Property Unit Trusts (JPUTs) enjoying a resurgence among South East Asian sovereign and institutional investors. The Jersey Private Fund regime is also highly attractive for Asian-based investors

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THERE IS CURRENTLY a wall of capital from Asian investors focused on European assets. But why the interest? Gavin Wilkins, Global Head of Client and Intermediary Relationships at Hawksford, believes that, although interest has existed for a long time, there’s a broadening of interest from some markets to others. “There has always been a strong appetite for UK investment from Malaysia, India and China into the UK,” he says. “You don’t have to rack your brain particularly hard to come up with highprofile industrial, commercial and even nuclear investments.” He points to an increasing appetite in Malaysia for real estate investment in the UK, extending a longstanding theme in other parts of Asia. “UK real estate has held a special place in the hearts of Asian investors for decades, particularly London. ‘Trophy assets’ are seen as attractive at an ultra-high-net-worth individual, family office, pension fund and sovereign level. The obvious example is London’s Battersea Power Station – once featured on the cover of Pink Floyd’s album Animals and now an £8bn mixed-use regeneration site that has attracted major investment from Malaysia to the UK. Wilkins adds: “An advantage of being prestigious is that they are arguably more liquid and, as such, they are attractive to international investors willing to pay the required premium.” Richard Daggett, Partner at Ogier, agrees – we need only look at the London skyline for evidence that Asian investors like to acquire landmark buildings. The so-called Walkie Talkie (£1.28bn) and Cheesegrater (£1.15bn) buildings, as well as Battersea Power Station, are all iconic developments now in the hands of Malaysian and Hong Kong purchasers.

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Every brand has a story. We’ll work hard to understand yours, then we’ll communicate it in a way that gives you a competitive advantage. We might tell your story using a mix of people from our teams in Jersey, Guernsey, Birmingham and London. We might combine PR professionals, branding specialists, designers, marketers and our social and digital team – whoever tells your story best. Our approach changes from client to client, from project to project. We are not a PR consultancy, a digital agency or a design house. We are all of these and more. We are communications problem-solvers. We are Liquid.

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Investment trends looking to access opportunities in the UK and Europe due to its flexibility, cost-effectiveness and speed to market,” Wilkins says. “We have also seen a trend over the past 18 to 24 months of Asian family offices establishing family funds and co-investment vehicles with other family offices, and the JPF is often an ideal solution in these scenarios.” On the private wealth side, Jersey’s credentials are familiar in Asia, and the value of what a sustainable international finance centre like Jersey offers is now much better understood. Wilkins says: “In some ways, value perception in Asia has been a blocker in the past and that probably shouldn’t be entirely surprising. “The global flight to quality and transition to substance-based structuring may not have favoured the traditional British Virgin Islands model, for example, which has been incredibly popular in Asia.” He adds: “The costs associated with global compliance and operating within a sustainable model are greater, and the willingness to pay those costs ultimately depends on value perception. “There have been more and more cases of bad and outdated structuring, causing issues that will continue to support that value appreciation.” Could associated higher costs be a potential challenge to the Channel Islands as they look to further establish themselves as a jurisdiction for Asian investors? McLaren takes a similar line to Wilkins on the value proposition. “Yes, the costs may be higher, but you get what you pay for. Issues such as the Panama Papers and the substance regulations have put a much greater focus on reputation, security and the ability to genuinely provide management and control. “You need infrastructure and experience to support substance in a jurisdiction and that’s why the Channel Islands have benefited from the flight to quality.”

SUCCESSION PLANNING With the rising level of wealth in Asia and the impending generational transfer of this wealth, are Asian families reassessing the management of their family assets? Are they considering using external providers, with experience in succession planning and family office functions? “Absolutely,” says Wilkins. “There has been a shift in approach that has been progressively gaining traction over the past decade. Trust is everything. “And in some cases, the selection of family advisers in Asia has arguably placed a greater emphasis on trust than professional competence. “The right approach is to try and work with trusted family advisers rather than compete against them, in time becoming a trusted adviser in your own right.

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Often the right approach is to work with trusted family advisers rather than compete against them, in time becoming a trusted adviser in your own right

complexities are persuading families to rethink and bring in expert assistance. Ling points to a combination of political situations – economic war between China and the US; uncertainty over tax regimes; China introducing the inheritance tax; as well as the international emigration trend of recent generations. “It’s essential for North Asian UHNWI families to seek help and professional advice to mitigate the potential risk and manage the complexity of their family issues and investment/wealth – especially when they are located in different regions.”

WHAT THE FUTURE HOLDS

He adds: “The global nature of Asian families and next-generation considerations are well documented and have probably been brought into sharper focus by the immediacy of the pandemic. “Covid-19-driven travel restrictions are likely to have accentuated that. So, it should be no surprise that succession structuring has moved from the ‘some day’ list to the ‘high priority’ one.” Covid-19 travel restrictions have also, Wilkins claims, caused some families to reflect on governance and the sheer geographical spread of their investment holding structures – the original rationale of which may have become less clear with the passage of time. Ada Ling, Business Development Manager in Ocorian’s Singapore office, agrees that political and geographical

The appeal of European assets will continue for the short term at least, but many questions remain about the longer term. Will the property market in the UK hold up post-Brexit? Will commercial property and central city office developments – some of them still under construction – have the same pull for investors now that companies have adapted to remote working? And how will European assets generally be affected by a deep, Covid-19-induced recession? These are the potential headwinds. But there are also potential incentives for increased investment. For instance, as Wilkins points out, further liberalisation of exchange controls in China may well increase the level of Asian investment into the UK and Europe. He concludes: “At the end of the day, people tend to favour investment in countries that they know and where they understand the market.” And those credentials certainly aren’t going to change. n

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Fintech

Fintechâ&#x20AC;&#x2122;s Eastern promise Words: James Tall

From large corporates looking to drive innovation, to emerging markets seeking ways to serve the underbanked, there are plenty of opportunities for Asian fintech developers. But will strict governments and regulators stifle their attempts to deliver? 48 asia edition 2020

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Fintech

FINTECH ADOPTION IN Asia is rife. In fact, there are signs that the East will soon eclipse the West in terms of activity and growth. This is all thanks to the region’s new sense of openness to regulatory innovation, perhaps best exemplified by the Monetary Authority of Singapore, as well as the growth of Open Banking and the increased acceptance and use of application programme interfaces (APIs) – the building blocks of the digital economy. “The rise of technology, and fintech, in Asia is here to stay,” says Martin Keelagher, CEO of Agile Automations. “The millennial generation especially expects access to resources instantly, and often for free, as we can see through the likes of TikTok and Facebook. And this attitude extends to financial services too. “A lot of the giant leaps forward in technology and infrastructure that we see in Asia are a direct benefit of not having the legacy systems we have in Europe and the US – they can start from scratch designing systems that truly meet the needs of consumers.” Despite that, the sector in Asia is not without its challenges. While many of the headline stories focus on the Chinese tech giants such as Alibaba and Tencent, Beijing looks to be toughening its stance on the sector. The $35bn Hong Kong IPO of China’s fintech poster child Ant Group, part of the Alibaba group, was pulled in November, for example, because of its failure to meet government requirements. This has slowed the mounting hype surrounding Ant Group and the wider Chinese fintech scene – and it’s unlikely that the strict Chinese administration will ever truly allow a fintech platform to completely bypass its banking system. Another challenge on the horizon for the sector is how China’s burgeoning payment platforms will interact with China’s upcoming Central Bank Digital Currency (CBDC), currently being piloted by the People’s Bank of China. Of course, Asia as a region encompasses far more than just China. And while there are issues to be ironed out in China specifically, plenty of other regions continue to thrive – from fast-growing younger economies such as India, which is home to more than 2,100 fintech companies, to the more mature markets such as Japan and the island hub of Singapore. Japanese financial institutions particularly are beginning to realise the power of fintech and are actively looking for investment and collaboration opportunities. Sumitomo Mitsui Banking Corporation (SMBC), one of Japan’s leading banks and one of the world’s biggest lenders, has recently announced that it has invested $30m in UK challenger bank OakNorth. But it’s Singapore in particular that’s vying with the likes of London and San Francisco for the title of the world’s most pre-eminent fintech hub.

Singaporean digital challenger banks have adopted a number of different new business models to increase operations within the wider banking sector. According to a new report from the Singapore FinTech Association (SFA), collectively they’ve experienced 300% growth in the past five years. The report’s authors also predict that South East Asia is about to see “the birth of home-grown technology giants and innovative non-financial services firms moving to acquire digital banking licences”. Keelagher says: “Many of these fintech solutions are geared towards helping small businesses, or micro businesses, to access alternative credit and funding streams. “Digital payments have seen an incredible rise, well above the average in many western countries. They not only make life more convenient, but also may lay the foundations for more sophisticated financial services.

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▼

A DYNAMIC ISLAND HUB

BUSINESS LIFE

THE WEALTH EDITION 2021 PUBLISHING IN FEBRUARY FOR EDITORIAL QUERIES, CONTACT jon.watkins@blglobal.co.uk FOR ADVERTISING, EMAIL CARL.METHVEN@BLGLOBAL.CO.UK

Fintech

The region’s brightest fintech minds are creating solutions to link up the plethora of new digital services

“However, this will obviously lead to the need to balance the convenience of technology with protections for customer privacy and their right to own their data.” The GDP of the five largest ASEAN economies – Indonesia, Malaysia, Thailand, the Philippines and Singapore – is expected to reach $4.3trn by 2030. However, a significant segment of the population of this ‘ASEAN 5’ remains underserved by banks, or indeed completely unbanked. To counter this, Indonesia, among others, has been making large investments in its fintech ecosystem. In October 2020, BRI Ventures, the investment division of Indonesia’s oldest bank, BRI, announced a $250m fund to invest in fintech initiatives

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to create ‘real value’ for the nation’s residents. The fund has already made strategic investments in digital wallet provider LinkAja, SME-focused firm PayFazz, and peer-to-peer lender Investree. “Technology is supporting the inclusion of more and more people in the financial system,” explains Keelagher. “This is huge. Until recently, roughly half of the estimated two billion unbanked people around the world lived in Asia. The development of fintech solutions and mobile transactions management has opened up new markets for providers, allowing for a more accurate view of national savings that can help to fund future economic growth.” Indonesia’s financial inclusion rate has reached record highs, hitting 76% last year, according to the country’s Financial Services Authority (OJK). The nation’s regulators and fintech firms now need to focus on balancing regulations with responsible innovation. As reported in The Jakarta Post, the OJK had to suspend the operations of 2,591 fintech companies between 2018 and 2020.

PROVIDING NEW RAILS Going a step further, some of the region’s brightest fintech minds are creating solutions to link up the plethora of new digital services. Singapore-based start-up Thunes, for example, is developing

a cross-border payments network to make financial services more accessible in emerging markets. “You’d be surprised to hear that the banked population in many emerging markets is around 75%,” says Peter de Caluwe, CEO at Thunes. “But it’s largely in the form of telecom operators providing mobile wallets, because these countries are underserved by the traditional banks. “Our mission is to build new network rails, acting like a SWIFT for emerging markets by connecting fintechs, telecoms companies, banks and so on – but also going a step further to move and disburse funds, acting as a full settlement house.” It’s not only Thunes that’s exploring better rails for a digital age. In September 2020, a network for cross-border payments was launched by Microsoft and Nick Ogden, founder of WorldPay and a prominent figure on the Channel Islands fintech scene. Ogden’s new company, RTGS Global, has collaborated with Microsoft to develop a new system that allows banks of all shapes and sizes to gain complete visibility of liquidity between their counterparties for the first time. The platform has the capacity to safeguard existing commercial banking relationships while changing the way they work – in many cases moving from cumbersome manual processing to an automated system that improves efficiency, reduces costs and enables a much higher level of customer service. In a nutshell, RTGS Global is overhauling the tired machinery of correspondent banking. It’s this level of ambition and innovation that Jersey and Guernsey need to draw upon to compete with the emerging fintech hubs in Asia. The good news is that fintech is becoming swiftly embedded across the islands’ core sectors, supported and encouraged by initiatives such as Digital Jersey’s Sandbox Journey. A recent survey by EY revealed that 88% of local businesses viewed fintech as a real opportunity – whether it’s the ability to harness the latest AI developments to offer robo-adviser hybrids that boost efficiency, or tapping into the data available in the Open Banking environment to better assess credit risk and affordability. Asia is busy consolidating its numerous resources to position itself as a fintech powerhouse. And by drawing on its natural advantages, the Channel Islands should be confident of keeping pace. n

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The

Knowledge Brain food for the busy business professional

The Knowledge is compiled by Alexander Garrett

Green China

China, the world’s largest emitter of carbon dioxide, has promised to become carbon neutral before 2060, and to begin cutting its emissions within the next 10 years. President Xi Jinping made this ambitious pledge to a virtual audience of world leaders at a meeting of the United Nations General Assembly in September. Experts consulted by the journal Nature said the country will have to more than double its production of electricity in the same timescale, with a 16-fold increase in solar and a ninefold increase in wind, while investing heavily in offsetting approaches such as carbon capture and storage and new forest growth.

Talking

points Health conversion

Playing rugby can reduce your risk of cancer as well as improve your muscle function and bone health. So says new research from Edinburgh University, which suggests that serious health benefits from a game of rugger balance out the well-known risk of injuries. The study, published in the British Journal of Sports Medicine and funded by the Rugby Football Union in collaboration with the Scottish Rugby Union, also found that playing rugby reduces the risk of type 2 diabetes, stroke, heart disease and depression. The team reviewed nearly 200 rugby-related studies from six continents to build a comprehensive picture of the sport’s relationship with health and to identify gaps in research.

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Feeling blue

Wearing glasses that filter blue light before you go to bed can improve your sleep and your productivity the next day, the US-based National Sleep Foundation has discovered. Research led by Cristiano Guarana at the Indiana University Kelley School of Business, looked into the theory that blue light emitted by most electronic devices can interfere with sleep. The researchers collected data from 63 company managers and 67 call centre representatives at Brazil-based offices for a US multinational financial firm and measured their performance of client tasks. Participants were randomly chosen to test glasses that filtered blue light and placebo glasses. The findings, reported in the Journal of Applied Psychology, were that wearing blue-light glasses before sleeping can lead to a better night’s sleep, better decision-making and a better day’s work.

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The Knowledge

Thai link

Thailand’s government is conducting studies into two projects that could significantly speed up transport of goods between China and the Middle East and India, as part of its Southern Economic Corridor plan. The Thai Canal would cut a 120km shipping channel across Thailand’s southern peninsula, joining the Andaman Sea and the Gulf of Thailand, and would save ships two days from the route passing through the Malacca Straits. However, critics say differing sea levels on each side of the country mean the canal could cause serious coastal erosion. A second option, a land bridge, would connect ports on the two coasts with a railway and a motorway, speeding the transit of cargo from one side of the country to the other.

Snake solution

An Indian biomedical company has come up with a mobile app that will help victims of snake bites to identify which species has bitten them and potentially save their life. Called SnakeHub, the app will provide a detailed profile of each of the 114 snake species native to Kerala, as well as information on how to treat bites, and hospitals where anti-venom treatment is available. Between 2015 and 2019, there were 55 snakebite deaths in Kerala and more than 24,000 incidents in total. The app has been developed by Indriyam Biologics and will be made available for free in both English and Malayalam.

Happy holiday

A US study has found that workers who were told to “treat the weekend like a vacation” turned up happier on Monday morning. The research published in Social Psychological and Personality Science split the sample into two groups on Friday evening; one group were told to treat the weekend like a regular weekend; the other group to treat it “like a vacation”. Perhaps unsurprisingly, the latter group reported more positive effects and greater satisfaction when returning to work on Monday. One of the key differences between the two groups was that the ‘vacation’ cohort had spent less time on housework.

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Joining the hunt

The stereotype of men as hunters and women as gatherers in ancient societies may be misplaced, following evidence unearthed in the Peruvian Andes. The discovery of a woman’s body with a number of big-game hunting tools at a 9,000-year-old burial site led anthropologists to investigate further. They reviewed 429 skeletons from 107 sites in North and South America and found that of the 27 buried with their hunting weapons, 16 were male and 11 were female. Randy Haas, an assistant professor of anthropology at the University of California, said: “It’s now clear that sexual division of labour was fundamentally different – likely more equitable – in our species’ deep hunter-gatherer past.”

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THE KNOWLEDGE

New in… BOOKS

Empirical evidence

Current account

The Great Imperial Hangover: How Empires Have Shaped the World by Samir Puri (Atlantic Books, £20, hardback) This is one of a slew of recent books looking at the imperial legacy, particularly of the UK. In this case, the author, an ex-diplomat and King’s College London academic, looks at how legacies of empire continue to affect the way countries behave today. The book is divided into regional sections covering China, Africa and the Middle East, as well as Britain’s role in India and the somewhat less overt imperialism of America and Russia. There’s even a section on the European Union and its ‘postimperial project’.

Banking on it: How I Disrupted an Industry by Anne Boden (Penguin Business, £20, hardback) This is the author’s account of how in 2014 she founded the UK’s first purely digital bank, Starling Bank. After a successful career at Lloyds Bank, Boden says she became disillusioned, especially in the wake of the financial crisis, and saw little appetite among conservative bankers to make the most of emerging technologies and revolutionise the customer experience. Setting up a new bank is not the easiest task at the best of times, but as a woman she also had to tackle prejudice and suspicion of her motives in getting the new enterprise off the ground. Starling Bank subsequently went on to win the Best British Bank Award for three years in succession.

All guns blazing

financial climate

My Life in Red and White: My Autobiography by Arsène Wenger (W&N, £25, hardback) The life story of one of football’s most respected managers in recent history will naturally be of interest to fans of Arsenal, where Wenger spent the glory years of his career. But it will appeal to football fans in general, for there are few coaches or managers who have had such a profound impact on the modern game. At the Gunners, Wenger completely changed the culture, bringing in new diets, fitness and coaching methods to a club where alcohol and gambling had been the norm. He was also arguably the manager who changed British attitudes towards foreign managers, ushering in the overseas talent that runs the Premier League today. And there’s plenty on Wenger’s early years in Alsace and his rise in football in France, then in Japan. Not for nothing is he known as The Professor.

Investing to Save the Planet by Alice Ross (Penguin Business, £14.99, paperback) Starting with the statement “investing responsibly is one of the most powerful ways you can combat climate change”, this is aimed principally at individual investors and consumers. Ross’s aim is to show how you can make your money make a difference – by picking the right sectors to invest in, such as smart farming or renewable energy; by being able to spot greenwash claims; and by holding to account the firms that you place your money with. A primer to the world of ESG and green investing, it has the endorsement of none other than Al Gore, former US vice president, who says: “This book presents a salient truth: every investor – no matter how large or small – has the power to help address our climate crisis and build a more sustainable world.”

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The Knowledge

In numbers: Asia’s economy RESOURCES

2020 The year Asia’s GDP will overtake that of the rest of the world combined Source: World Economic Forum

-2.2

Boost my Business Facebook’s podcast features interviews with business leaders and SME owners to help others succeed on Facebook platforms. Hosted by David Fischer, Facebook’s Chief Revenue Officer, in the first episode Courtney Shaw-Scipio, founder of Inspired by Annette Event Design and Rentals, talks to Arian Simone, co-founder of Fearless Fund. tinyurl.com/yxfo9mb7

Forecast percentage economic growth in Asia and Pacific, 2020. Global figure is -4.4% Source: IMF Regional Economic Outlook, October 2020

Global Entrepreneurship Week Global Entrepreneurship Week Guernsey (16-20 November) included networking opportunities, stories from market disruptors, advice on new business and a debate on data protection for start-ups. A panel of experts shared best practice on how to launch a business/product and Tobias Taupitz, founder of Laka, described his entrepreneurial journey. Search ‘Global Entrepreneurship Week Guernsey’ for more

62,021 GDP per capita of Qatar in $, the highest in Asia

Source: Trading Economics December 2019

Singapore Green Finance Centre Imperial College Business School, London, and the Lee Kong Chian School of Business at Singapore Management University have launched the Singapore Green Finance Centre. Specialising in financial economics and sustainable investing, its aim is to develop a pipeline of green finance talent. Its multi-disciplinary research and training will enable corporates and policymakers to better manage environmental risks, develop financial solutions and design policies for a sustainable future. www.singaporegreenfinance.com

Rose Review Female Entrepreneurs Mentoring Programme Launched by NatWest bank and Be the Business, this offers free mentoring to women business owners in Bristol, Bath and Leeds initially, with a plan to roll out across the UK next year. The initiative is a response to the review by NatWest CEO Alison Rose, which identified challenges for businesswomen around sponsorship, mentorship and role models. The 12-week programme allows entrepreneurs to select the right mentor. www.bethebusiness.com/rose-review-mentoring

Number of Asian countries in the top 20 economies in the world (China, Japan, India, South Korea, Indonesia, Saudi Arabia, Turkey) Source: Investopedia

39.2

Percentage of the world’s wealth held by Asia-Pacific countries Source: Credit Suisse, 2019

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THE KNOWLEDGE

How to…

...Be a modern expat The pandemic posed enormous challenges for expatriate workers, and forced many to return to their own country for the immediate future. But it has also arguably changed our way of working forever and opened many people’s eyes to the idea of working remotely or relocating to another part of the world. So what does it take to be an expat in 2020 and beyond?

Become a digital nomad It’s no longer necessary for an employer to send you to work abroad. If you’re freelance or selfemployed and your work isn’t based in a specific location, the world is your oyster thanks to digital technology. In the past few years, thousands of people, many of them young, have found they can work from a coffee shop, hotel or rented apartment anywhere in the world, so long as they meet their deadlines and are willing to fit in with the time zone of their client or employer. Some even combine their work with a lifestyle of constant travel. Probably best if your work is largely self-contained, such as a writer or artist.

Choose your destination carefully “Platforms such as InterNations allow you to ‘meet’ people in your host city even before you’ve made the move”

There’s never been more opportunity to work in other countries, but expats generally agree that some are far more enjoyable to live in than others. In InterNations’ 2020 Expat Insider survey, 15,000 respondents chose Portugal as the most friendly country to work in, ahead of Taiwan, Mexico and Cambodia. The environment has also become a big issue for many expats – in eco terms, the same survey ranked Finland top and India bottom.

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It’s no longer one-way The days when expats all came from Western countries are a thing of the past. “The definition of an expat is changing,” says global HR consultancy Chapman CG. “These days, an expat is less often an American or European executive posted to an emerging region or country, empowered to sit atop a group of local employees. Instead, an expat can be a high-potential Chinese, Singaporean, Brazilian or Indian national sent to the US or the UK, for example, by a US, European or Asian multinational.”

Think long term Expat assignments tend to be longer term these days, as working abroad becomes more of a career choice. A study in July 2020, conducted by Ipsos MRBI on behalf of international health insurer Allianz Care, found that 76% had changed job since moving to their new country; 59% had bought a home; and 58% said they planned to stay in their adopted country long term.

Put your family’s health first The Covid pandemic has made expats put the health of their family at the top of their priority list. The Allianz research found that 52% of those surveyed had changed their priorities in the past year, with more than half (53%) saying that health and wellbeing is a greater priority than previously. Some 73% said the health and wellbeing of their family was a crucial consideration in deciding whether to stay abroad or move back home.

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The Knowledge

Business leaders on making it to the top

Getting ahead Wisdom Hon, Senior Associate leading the private wealth team at Ogier, Hong Kong Drop your cultural barriers It’s down to you to adapt. To really appreciate and understand your host culture, a good starting point is to try and understand your own home culture, advises expat online community InterNations. “Acquiring practical intercultural skills is the hardest part of cross-cultural learning,” it says. “It means being able to analyse misunderstandings and set them right or being able to avoid them in the first place.” Learn the language and immerse yourself in every aspect of your new country, spending time with locals rather than just your fellow expats.

Stay connected Loneliness and isolation have been among the biggest issues for those working overseas. In the age of social media, there’s no excuse for not keeping in touch with family and friends back home. But there are also unprecedented opportunities to link up with other likeminded people, especially through platforms such as InterNations, where you can ‘meet’ people in your host city even before you’ve made the move. Networking and social events organised by such groups mean it’s easier than ever to meet new people in your host city – and build a social circle away from home.

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What was your first career? I served as an auxiliary police officer while working in a logistics company to see how business works in an international context. The police work allowed me to meet people from all walks of life. I resolved conflict in emotional circumstances, and on patrol I was alert – it shaped my conflict management skills and powers of observation.

How did you move into law? A decade ago on a plane, I got chatting to a US lawyer, who told me I should be a lawyer. This led to me quitting my work in Hong Kong to study law in London. I then joined a boutique private client law firm.

What’s the key to success when advising private clients? Be the TOE of your client – trustworthy, open-minded and empathetic. Clients come from diverse backgrounds blended with culture, experience and values. Being able to connect with your client helps build trust and confidence. Don’t be judgmental. Try to step into the client’s shoes to see things through their eyes.

How important is it to understand the language and culture of Chinese clients? Chinese values are deep rooted in today’s society – to understand culture, you need to learn the language. Chinese culture differs from the West’s individualistic culture. Western advisers may not understand why Chinese clients act in a certain way or why they do not think that the ‘Western best’ approach is good.

What should companies in Europe learn from Asia? Asia comprises various countries, each with its own culture. Choose your market, gather intelligence about that market and build your business network in that market. Tapping into an entirely different market is not easy, but with the right tools and preparation, it can be hugely rewarding.

How has playing the piano helped your career? Piano-playing has taught me patience and persistence. It takes time to build trust and find a solution for clients; I have to be patient and persistent. And if I’ve decided to take up a legal matter, I have to continue the journey with my clients.

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THE KNOWLEDGE

GURU

WATCH

Masayoshi Son

e’s the man who raised a $100bn investment fund, the Mohammed Bin Salman to sink $45bn into the fund in 45 minutes. world’s biggest. He’s also made the biggest net worth loss Unlike many tech investors who buy small stakes and add in history – $70bn when the dotcom bubble burst. And to them over time, Son bets big on potential winners, leading he’s one of the most ardent champions of artificial intelligence. to criticism that SoftBank has helped inflate the value of tech Masayoshi Son, founder of Japan’s SoftBank, has been described companies and create a bubble. But underpinning Son’s approach as “the most influential investor in Silicon Valley”. Born in is a cast-iron belief that tech is far from overvalued but set to Japan to Korean parents, he is seen by detractors as a transform almost every aspect of our lives. He has said he reckless gambler playing a high-stakes game by placing thinks three centuries ahead and has even put a date on “I have a keen huge bets on technology players. Some gambles – the moment the Singularity (when machine intelligence Tesla, Netflix, Amazon and Alphabet – have paid off will surpass humans’) will occur – 2047. interest in reading handsomely. One of his biggest wins was investing Son remains modest in some regards. In an the direction $20m in Alibaba in 2000. interview with Japanese news agency Nikkei, he said: and timing of Others, including SoftBank’s 80% stake in “I haven’t invented anything earth-shattering. If I paradigm shifts” could be said to have one noteworthy ability compared WeWork – WeWork pulled its IPO last year – have looked less wise. And its recent decision to sell British with the average person, it’s that I have a keen interest in chip manufacturer ARM Holdings to Nvidia for $40bn has reading the direction and timing of paradigm shifts. also attracted criticisms of overpayment and overinvestment. “I’m better than others at sniffing out things that will bear fruit The fact that Son was able to raise $100bn for the SoftBank in 10 or 20 years while they’re still at seed stage, and I’m more Vision Fund highlights his audacity: he persuaded Crown Prince willing to take the risks that entails.”

digital twin

As the Internet of Things makes steady progress putting everything in the world online, expect to hear more of the term digital twin. A digital twin is defined as a digital replica of a living or non-living entity. So if you want to know how the real-world one is going to respond or perform in certain circumstances, you can try it out first on the digital sibling. And with a helping of artificial intelligence or machine learning added, the digital twin can help its reality-based other half adapt. This is obviously important in the IoT because the physical entity is likely to be equipped with sensors that provide a constant stream of real-time data to the digital twin. The concept is already being deployed in jet engines and autonomous vehicles and is expected to become more common in healthcare, where you may literally find that one day your body has a digital twin. A bit confusing if you have a physical twin…

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Co-opetition Competing with someone at the same time as you cooperate with them

Working at home syndrome Stiff necks and crooked backs caused by underinvestment in your home office

BUZZWORDS…

JARGON BUSTER

ALSO NEW IN THE WORLD OF

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The Knowledge

Top tech Chip makers COMPETITION IS HOTTING UP AMONG THE TECH GIANTS TO MANUFACTURE SEMICONDUCTORS, THE ALL-IMPORTANT COMPONENT OF THEIR HARDWARE – SO WHO’S WINNING THE WAR?

hen the world’s biggest technology companies are rounded up – Facebook, Apple, Amazon, Google et al – there’s not a single company among them that makes the essential hardware component that they all rely on, the semiconductor. Silicon chips were once regarded as the cutting edge of the technology revolution, but they’ve long since been surpassed by content. Now, however, a serious struggle is taking place to become the dominant global force in the semiconductor world. In June, Nvidia overtook incumbent Intel to become the US’s most valuable chipmaker with a market capitalisation of £248bn, even though its revenues are a fraction of Intel’s size. The company specialises in making powerful graphics chips used in applications such as computer gaming, as well as mobile ‘system on a chip’ units installed in cars. It also has a business providing components for supercomputers. As such, Nvidia has diversified away from its roots in PC chips far more successfully than Intel and is also making a play for Intel’s key market in supplying the processors that power data centres. In September, Nvidia agreed to pay $40bn to buy ARM Holdings, the Cambridge-founded chip design company that is one of the leading players in mobile phones, tablets and smart TVs. Potentially this would put Nvidia in an even more pre-eminent position – even though, strictly speaking, the company doesn’t actually manufacture its own semiconductors, outsourcing this function to third parties. Nvidia has also left behind its erstwhile rival in the graphics processor stakes, US company Advanced Micro Devices (AMD), whose $84bn valuation is just a third of Nvidia’s. By November, Nvidia’s market capitalisation had soared to $350bn, making it one of the hottest stocks of the year. However, when you look beyond the US, Nvidia doesn’t have its own way so easily. TSMC

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– the Taiwan Semiconductor Manufacturing Company, which is one of Nvidia’s key suppliers – has fared even better, with a market cap of around $450bn. Korea’s Samsung, which does much more than make chips, is not far behind. TSMC is what is known as a ‘pure-play’ manufacturer – it doesn’t design chips itself, but only makes them, largely on behalf of other companies. It’s one of the companies that manufactures iPhone and iPad chipsets for Apple – a tie considerably strengthened since the US government forced it to break ties with China’s Huawei earlier in 2020. That brings us to China. Unusually, for a country that prides itself as the world’s manufacturing hub, China makes only around a third of the semiconductors it uses. It has been pouring investment into its own chip-making companies – most notably Shanghai-based Semiconductor Manufacturing International Corporation (SMIC) – and has decreed that by 2025, the country should be manufacturing 70% of its semiconductor requirements locally. In October, the US government followed its sanctions against Huawei by announcing that US companies could no longer supply SMIC without an export licence, heating up what threatens to be a chip war between the world’s two biggest economies. China also wants to take on the tech giants of Taiwan and South Korea in becoming the leading supplier to the global market. As artificial intelligence becomes the driving force in innovation over the coming decades, some believe that semiconductors will become as important a strategic consideration as military capabilities. At the same time, there is widespread doubt around whether China has the technological expertise to win this war. But one thing’s for sure: chips are going to be back at the top of the menu going forward.

WHAT’S

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asia edition 2020 59

Directory To advertise in the directory in print or online contact Carl Methven on + 44 (0)1534 615886 or carl.methven@blglobal.co.uk

Independent and Professional We offer a full range of management and fiduciary services to our domestic and international private clients and corporate structures: Family office - bespoke assurance Wealth management - your strategy l Trustee - impartiality with vision l Corporate services - attention to detail l Good governance - a helpful eye l Strategic guidance - controlled ideas l

Our team has many years of experience dealing with a wide range of clients in different countries. We look to provide good corporate governance to achieve your aim. Contact us: Tim Cartwright – Director tcartwright@baccata.co.je Lisette Le Creurer – Associate Director llecreurer@baccata.co.je Wendy Warder – Associate Director wwarder@baccata.co.je Áine O’Reilly – Director aoreilly@baccata.co.je www.baccata.co.je Tel: 00 44 1534 870670

Fiduchi is a leading independent financial services company providing solutions to high-net-worth individuals and businesses around the globe. Our independence ensures we have the flexibility to deliver bespoke solutions - that’s what makes us different! Over 25 years, our director-led teams have built long-term valued relationships with clients and their professional advisors, ensuring a pragmatic and trusted approach to their wealth structuring needs. Using the latest technological cloud-based solutions ensures we have the flexibility to deliver timely and innovative solutions that our clients require. Visit our website to see the comprehensive range of services we provide in the following areas: l Private Wealth l Corporate Services l Fund Services l Yacht Services l Employee Services For more information, visit www.fiduchi.com Alternatively, you can contact: Robert Ayliffe - Executive Director Tel: +44 7700 349 750 Heidi Thompson - Executive Director Tel: +44 7797 966 408

We aim to assist in the provision of personal service to meet your requirements. Ask us.

Terry Northcott - Executive Director Tel: +44 7797 715 421

Being vigilant and proactive in the face of a fast changing legal, economic and fiscal landscape. We can provide the focus to your solution. Try us.

Regulated by the Jersey Financial Services Commission

60 asia edition 2020

Dubai / Jersey / London Fiduchi is regulated by the Jersey Financial Services Commission. Full legal, data and regulatory notices are published on our website. Fiduchi® is a registered trademark of Fiduchi Group Limited.

Highvern Trustees is a leading provider of wealth structuring, governance and advisory services to an international client base of high-net worth individuals, their families and businesses. It offers senior industry expertise and client focus, developing long term, sustainable client relationships by working closely with getting to know the individual ambitions of every client with whom it works. Highvern Fund Administrators provides a fully tailored suite of bespoke fund services to investment managers and family offices across private capital markets including renewables, private equity, real estate and debt. Both businesses are built on cutting edge technology, truly independent ownership and a team of experts with the shared vision of responding to clients’ needs in a flexible, timely and constructive manner. To discuss how Highvern can help you or your business achieve your goals please contact: Family Office Naomi Rive, Group Director +44(0)1534 480601 naomirive@highvern.com Private Client Philip Carlton, Client Director +44(0)1534 480610 philipcarlton@highvern.com Corporate Naomi Rive, Group Director +44(0)1534 480601 naomirive@highvern.com Funds Aidan O’Flanagan, Head of Funds +44(0)1534 480690 aidanoflanagan@highvern.com highvern.com Highvern is the registered business name of Highvern Trustees Limited & Highvern Fund Administrators Limited which are regulated by the Jersey Financial Services Commission.

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Intertrust is a global leader in providing techenabled corporate and fund solutions to clients operating and investing in the international business environment. The Company has more than 3,500 employees across 30 jurisdictions in Europe, the Americas, Asia Pacific and the Middle-East. Intertrust delivers high-quality, tailored fund, corporate, capital market and private wealth services to its clients, with a view to building long-term relationships. The Company works with global law firms and accountancy firms, multinational corporations, financial institutions, fund managers, high net worth individuals and family offices. In the Channel Islands we offer a comprehensive range of services to our clients and business partners:-

Julius Baer’s origins date back to 1890. From that time the renowned Swiss private banking group has been dedicated to serving and advising sophisticated private clients and family offices from around the world – going on 125 years now. Julius Baer employs more than 120 personnel in Guernsey and offers a full range of financial services, including discretionary portfolio management, investment advisory, structured products and credit services. There is also a dedicated team that supports the needs of External Asset Managers and the Branch works closely with the wider Julius Baer Group through the provision of administration and support services that are delivered from its booking centre.

Corporate Services Fund Services l Real Estate Services l Capital Markets l Private Wealth l Performance & Reward Management Services

Stephen Burt Branch Manager stephen.burt@juliusbaer.com

We pride ourselves on providing professional, personal and cross-border services to our clients across the globe, enabling businesses to grow sustainably.

Craig Allen Head of Investment Management craig.allen@juliusbaer.com

l l

For further information, please contact Jacob Smed Managing Director, Jersey +44 (0) 1534 504000 jacob.smed@intertrustgroup.com Marie McNeela Managing Director, Guernsey +44 (0) 1481 211275 marie.mcneela@intertrustgroup.com Intertrust Jersey is regulated by the Jersey Financial Services Commission and Intertrust Guernsey is regulated by the Guernsey Financial Services Commission.

Jean-Luc Le Tocq Head of Private Banking jeanluc.letocq@juliusbaer.com

Shaun Kelling Head of External Asset Management shaun.kelling@juliusbaer.com https://www.juliusbaer.com/gg/en/home/ Bank Julius Baer & Co Ltd, Guernsey Branch is licensed in Guernsey to provide banking and investment services and is regulated by the Guernsey Financial Services Commission.

Ogier provides legal advice on BVI, Cayman, Guernsey, Jersey and Luxembourg law. Our network of locations also includes Hong Kong, London, Shanghai and Tokyo. Legal services for the corporate and financial sectors form the core of the business, principally in the areas of banking and finance, corporate, investment funds, dispute resolution, private equity and private wealth. Ogier has strong practices in the areas of employee benefits and incentives, employment law, regulatory, restructuring and insolvency and property. We are a registered listing agent for The International Stock Exchange (TISE, formerly known as The Channel Islands Securities Exchange or CISE) and frequently advise companies listing on other exchanges whether offshore or onshore. We also provide pan-Island legal services for local Channel Islands businesses and individuals. Contact: Guernsey Redwood House St Julian’s Avenue St Peter Port Guernsey GY1 1WA T +44 (0)1481 721672 E gsy@ogier.com Jersey 44 Esplanade St Helier Jersey Channel Islands JE4 9WG T +44 (0)1534 514000 E jsy@ogier.com Website: www.ogier.com

www.intertrustgroup.com

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asia edition 2020 61

Data focus

Asia’s wealth surge Projected growth in global wealth by 2023

Number of high-net-worth individuals

Wealth ($bn)

The americas 2018

2023 forecast

$26,139bn

$34,655bn

CAGR 5.8%

9,852,200

eMEA 2018

2023 forecast

2018

$18,350bn

$23,425bn

$16,787bn

CAGR 5.0%

6,455,690 13,100,840

asia-pacific 2023 forecast

$24,084bn

CAGR 7.5%

6,094,620 8,250,570

8,772,030

CAGR: compound annual growth rate

ASIA-PACIFIC LEADS WEALTH GROWTH PROJECTIONS

With so much of the opportunity in Asia being driven by the growth of the high- and ultra-high-net-worth wealth holders in the region, it’s useful to explore predicted trends for wealth growth globally in the coming years. Following modest growth in the global HNW population and its collective net worth in recent times, stronger growth is forecast to 2023. Dividing the world into three continental groups, the Americas, Asia-Pacific and EMEA (Europe, the Middle East and Africa), Asia-Pacific is forecast to experience the strongest growth in the number of HNW individuals and combined wealth. The region’s HNW population is projected to increase at a compound annual growth rate of 7.6% over the next five years. At some point in 2020/21, a significant milestone will be reached, where the HNW population of the region is expected to overtake that of EMEA. Source: Wealth-X High Net Worth Handbook 2019

62 asia edition 2020

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Expert guidance. Clear direction.

Restructuring and Corporate Recovery Our expertise extends to all aspects of restructurings, from consensual workouts to contentious schemes of arrangement. Our team includes some of the foremost names offshore and our multidisciplinary approach enables us to offer a one-stop, costefficient solution that cuts through complexity to get to what really matters.

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